Terra Luna has plunged by more than 95 per cent in today’s trading session. The cryptocurrency has also plunged by 99 per cent this week. It is likely that we are seeing the end of the Terra Luna project.
For starters, Terra Luna was one of the best performing cryptocurrencies in recent months. The Terra project, which is the parent company for Terra Luna, also had another project, the Terra stablecoin UST. The UST stablecoin project marketed itself as being pegged to $1 in a ratio of 1:1.
However, the latest developments, which many believe are a result of the Federal Reserve raising. This resulted in the de-pegging of the algorithmic stable coin UST causing its value to fall under 50 cents. In today’s trading session, traders and investors who had pegged their assets with the stable coin started selling off their digital assets to cover losses.
The UST problems extended even to other Terra projects such as Luna resulting in a massive sell-off that has seen the crypto fall by more than 99 per cent in the past seven days. Ideally, algorithmic stablecoins are supposed to be automatically pegged to another Fiat coin and, and when the prices fall, they can be minted. For UST, users could either redeem the token or mint a dollar worth of Luna at any time, which in theory, helped it maintain the $1 peg. However, with UST losing its peg to the US dollar, the value of Luna being minted was also devalued. This started a chain of events that saw the price of UST and Luna starting to fall to the current level.
Although the LUna founder has indicated support for community proposals on how to bring back the UST to the value of $1, it is unlikely to see Luna recover. There is also a high likelihood that future investors will be highly cautious of Luna. There will also be minimal interest from investors in the Terra Luna project.
My Luna price prediction expects the prices to continue falling down in the next few trading sessions. There is also a high likelihood that we will not be seeing a recovery of the cryptocurrency. The current drop also makes investing in the crypto for the next few trading sessions highly risky.
In case measures are taken to address the UST, then my trade analysis will be invalidated, and we might see a small gain in the market for Terra Luna.
Terra Luna Daily Chart
