{"id":331386,"date":"2022-06-05T06:15:44","date_gmt":"2022-06-05T10:15:44","guid":{"rendered":"https:\/\/insidebitcoins.com\/?p=331386"},"modified":"2022-06-05T09:31:04","modified_gmt":"2022-06-05T13:31:04","slug":"speculators-are-making-luna-volatile-analyzing-the-price-convergence","status":"publish","type":"post","link":"https:\/\/insidebitcoins.com\/news\/speculators-are-making-luna-volatile-analyzing-the-price-convergence","title":{"rendered":"Speculators are Making Luna Volatile – Analyzing the Price Convergence"},"content":{"rendered":"

One of the most frequently traded crypto coins in the digital space, LUNA, caused chaos across the crypto world when it lost its value from about $100 to few cents in literally no time. Caused by the crash of TerraUSD, the downfall of LUNA was strong enough to bring down the value of the mightiest player in the game, Bitcoin.<\/p>\n

LUNA, which traded in three digits around the month of April came down to a few cents, thereby prompting a rush of buying from speculators hoping for a miracle rebound, with others holding to the assumption that it is simply too big to collapse.<\/p>\n

This entire episode of rise and fall of LUNA followed by the introduction of LUNA 2.0 is showcasing how the volatility of crypto could be influenced immensely by the activities of the speculators.<\/p>\n

What Went Wrong for LUNA – Is LUNA Dead?<\/h2>\n

For understanding the recent price swings witnessed in LUNA, it is important to revisit the crash of TerraUSD (UST). It’s an “algorithmic” stablecoin, with a “sister” token named LUNA that runs on pre-programmed “smart contracts” to back its value. When the value of Terra falls below $1, it can be exchanged for LUNA tokens (at a low return). In principle, this should maintain both of their values steady.<\/p>\n

But the trouble was that these complicated algorithms proved to be ineffective. LUNA and UST both crashed<\/a> at the same moment, in what observers have dubbed a “death spiral.” In other words, investors hurried to sell their crypto coins before the “algorithmic” stabiliser could kick in. The “sister” token’s value dropped from around $86 at the start of this week to barely 0.003 US cents in a matter of days.<\/p>\n

\"LUNA<\/p>\n

The Fall of LUNA Coin in the month of May 2022 – Currently priced at $0.00008317<\/em><\/p>\n

In other terms, LUNA has fallen (and virtually lost all of its value) in a really short period of time. LUNA’s market value plunged from $40 billion to around $500 million, causing a sell-off and a breakdown of trust across the cryptocurrency industry.<\/p>\n

This drop in LUNA’s value was linked by industry analysts to factors such as the “whale dumping” of tokens, which relates to individuals such as foreign institutional investors who are bulk purchasers and sellers, causing panic among ordinary investors.<\/p>\n

The pegged price of UST reduced from roughly a dollar to 91 cents as a result of investors unstaking nearly $2 billion dollars of UST and also dumping them. At the same time, speculators attempted to profit from the situation by turning 90 cents of USTs into one dollar of LUNA coin, and resultantly, the value of the LUNA coin was even more reduced.<\/p>\n

Understanding Terra Luna’s Price Movement <\/strong><\/h2>\n

Like other cryptocurrencies, Terra Luna’s price follows Bitcoin. The Digital asset grew quickly. Late July 2019 saw LUNA’s price drop to $1.29. A market consolidation sent the utility token to $0.17.<\/p>\n

After then, LUNA’s price rose, and it became popular in 2021. Luna rose from $0.1 to $21.4 in the second half of 2021. It went down to $5.95 in July 2021 before recovering. The Terra blockchain made a similar guarantee, and the digital currency climbed to $99.72 in late 2021.<\/p>\n

This year, the digital asset ecosystem won and lost. By mid-February 2022, Luna’s gains were cut in half. Luna hit $119.18 on April 5. After many poor market performances, Terra Luna prices are suffering. ATH is less than $1 and it is witnessing a bearish price action.<\/p>\n

Luna’s price drop is due to a market downtrend and de-pegging of its UST stablecoin. Recent UST withdrawals de-pegged the stablecoin, hurting Terra Luna’s bear market pricing. Project designers want to re-peg UST to the dollar.<\/p>\n

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2022 Terra Luna Price Prediction<\/strong><\/h2>\n

Note –<\/strong> In this section, a ‘LUNA price prediction’ refers to Terra Classic (LUNC)<\/a>, ‘the old LUNA’.<\/p>\n

Despite its problems, Terra is still an intriguing concept. It’s the only stablecoin-facing crypto project. Investors want a more stable and less volatile digital exchange medium than pure-play crypto assets. We feel the Luna price projection will improve despite the present bearish price action.<\/p>\n

Monthly Glimpses of its Rallies:<\/strong><\/p>\n