The cryptocurrency Terra (Luna) is experiencing a major price crash due to its link to the stablecoin terraUSD (UST) which recently decoupled from the US dollar.
This has resulted in Luna collapsing by over 99%.
With its value peaking at almost $120 last month, the value of the coin dropped from about $6.75 to around $1 on Wednesday, dropping even further on Thursday taking it to just $0.02 on Thursday afternoon.
The crash occurred because of its link with the terraUSD (UST) stablecoin which had been pegged to the US dollar until earlier this week. A stablecoin is a cryptocurrency which aims to stabilise the market by linking to traditional currency or commodities such as the USD or gold.
This detachment from the dollar sent connected cryptocurrencies on an immediate price crash.
The market cap of Luna fell from around $40bn (£32.9bn) to just over $200m (£164m).
On Wednesday major crypto exchange platform, Binance, suspended withdrawals of Luna crypto temporarily.
This comes along with a price crash throughout the whole cryptocurrency industry, with people referencing a “crypto winter” or a more serious “crypto ice age” on the cards. Several crypto coins have experienced a price crash, with many losing up to a quarter of their values in the past few days.
Although there seems to be a possibility of recovery. Investing Cube, an investing advice site has said that there is a “good chance” of recovery for the cryptocurrency Luna, and Kelvin Maina, an analyst stated: “For Luna to recover, they will need to address the problem and show clearly that such a drop will not happen again. As an analyst, I expect to see a bump in Luna prices after UST is pegged back to the dollar. I also expect the prices to start recovering after the Terra project shows that similar problems will not happen in the future.”
