Trouble Hits Luna Investors as Stablecoin Drops to Zero in Value

Trouble Hits Luna Investors as Stablecoin Drops to Zero in Value

  • Investors of LUNA in Nigeria are in hypertensive mood as the crypto is now worth nothing after it lost being pegged to the dollar on Thursday. May 12, 2022
  • Bitcoin rebounded and rallied to $30,00 on Friday after it witnessed a massive selloff over the week which triggered a crash in the crypto industry
  • LUNA is closely linked to UST which is dubbed an algorithmic stablecoin, meaning it was supposed to be pegged one-to-one dollar

Investors of Luna, the stablecoin that collapsed on Thursday, May 12, are crying as the value of the cryptocurrency equals nothing, trading at $0 on Friday, May 13, 2022.

Nigerian investors have bemoaned their luck as the value dropped to about N23 per LUNA, while it crashed on the international market.

LUNA, UST, USD Terra
Luna now next to nothing after crash Credit: SOPA Images / Contributor
Source: Getty Images

Bitcoin coming back but still a long way off

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As Bitcoin staged a comeback, surging above $30,000 irrespective of the ongoing troubles of stablecoins like TerraUSD that created panic in the market, investors of LUNA are in a hypertensive mood.

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Bitcoin traded at around $30,262.85 on Friday, May 13, 2022, data from CoinGeck said, an 8 per cent jump in the last 24 hours after dropping to an all-time low since 2020 this week.

However, Bitcoin is still down 16 per cent in the last few days. The recent crypto breakdown saw billions of dollars wiped off the market and has the most part been scintillated by the crash of TerraUSD which was hoping to be pegged to one-to-one with the dollar.

LUNA's crash, spiral effect on the crypto industry

It lost its peg on Friday, May 13, 2022, trading at 14 cents, data from CoinGecko said.

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Crypto market makes marginal recovery as Bitcoin trades above $30,000

Luna, a token closely associated with UST, is now worth $0 as a result.

CNBC said that UST and luna are linked. UST is dubbed an algorithmic stablecoin which means its $1 peg is supposed to be controlled by underlying code. That is fundamentally different to other stablecoins like tether and USDC which are backed by real-world assets such as bonds. UST has no real-world reserves.

The extreme market uncertainty has tested UST, making it lose its peg.

Terra blockchain which controls UST and LUNA stopped processing transactions twice in less than 24 hours.

Crypto market makes marginal recovery as Bitcoin trades above $30,000

However, Legit.ng has reported that largest cryptocurrency, Bitcoin began a bullish run at the London session on Friday May, 13, 2022, trading above the $30,000 threshold.

Bitcoin jumped over 10 per cent after plummeting to trade as low as $26,350.49, because of the Luna capitalisation.

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Crypto billionaires who lost vast fortunes due to a tumble in prices

The crypto industry cap ramped up by 11 per cent to currently stand at $1.3 trillion.

Source: Legit.ng

Authors:
Pascal Oparada avatar

Pascal Oparada (Business editor) Pascal Oparada is a Mass Communications Graduate from Yaba College of Technology with over 10 years of experience in journalism. He has worked in reputable media organizations such as Daily Independent, TheNiche newspaper, and the Nigerian Xpress. He is a 2018 PwC Media Excellence Award winner. Email:pascal.oparada@corp.legit.ng

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