Luna Cryptocurrency Collapse: How UST Broke and Why It Matters

May 15, 2022

Last week, a luna coin was worth $85. Now it’s worth a penny. Here’s why that matters.

The cryptocurrency market isn’t pretty right now. Look anywhere and you’ll see red: bitcoin and ether are both down over 30% week-over-week, hitting lows not seen since 2020, and altcoins like solana, dogecoin and cardano are faring even worse. It’s bad news for crypto investors, but nothing unheard of. These are notoriously volatile assets reacting to tempestuous economic conditions.

What’s much more unusual, and much more important, is the collapse of the luna cryptocurrency and its associated TerraUSD (UST) stablecoin. You may not have heard of UST before, or know what a stablecoin is, but it’s a big deal. Billions of dollars in crypto wealth has been vaporized, sending shockwaves throughout the whole market.

There are two intertwined stories here: That of the UST stablecoin and that of luna, both of which are part of the Terra blockchain. The UST coin is designed to retain a value of one US dollar at all times, but depegged on Saturday and has since fallen to as low as 30 cents. Then there’s luna, the centerpiece of Terra’s ecosystem. Its value has collapsed in one of the most stunning crypto crashes ever recorded.

The coin’s price fell from $116 in April to just a penny on Thursday. Its marketcap now stands at $641 million, down from a peak of over $40 billion.

“This is historic for the crypto markets,” said Mike Boroughs, cofounder of crypto investments firm Fortis Digital. “This is a defining moment for the space due to its size and impact in terms of the amount of people that lost substantial value.”

This excerpt was shared from CNET. View in full here: www.cnet.com/personal-finance/crypto/luna-cryptocurrency-collapse-how-ust-broke-and-why-it-matters/~~◃

“The grim irony of investing, then, is that we investors as a group not only don’t get what we pay for, we get precisely what we don’t pay for. So if we pay for nothing, we get everything.” – John C. Bogle

sc name=”fma-cta”]

This website is owned and operated by Investor Unity Pty Ltd (ABN: 90 160 624 331). Any advice included in this website or correspondence is general advice only and is based solely on consideration of the investment or trading merits of the financial products alone, without taking into account the investment objectives, financial situation or particular needs (i.e. financial circumstances) of any particular person. In addition to its internal services, Investor Unity is compensated by brokers and other third parties by way of referral/affiliate and/or general partnership arrangements, via its websites and other communications. Investor Unity is genuinely interested in your long-term trading & investment success. We advise you to take all necessary steps to ensure you have a good understanding of the products & services you’re considering investing in – particularly if they involve leverage. While Investor Unity takes every care to ensure that we only deal with the highest quality services, from throughout the industry, past performance is not a guarantee of future performance. Before making an investment or trading decision based on the general advice, the recipient should carefully consider the appropriateness of the advice in light their financial circumstances and should carefully review the PDS of the relevant financial product as provided by your investment broker. Past results are not a guarantee of future performance. Please contact us, to discuss any questions or concerns you may have- we are here to help.