• The SEC charged Terra founder Do Kwon with fraud over the $40 billion crypto crash, which adversely affected the market and LUNA’s price.
• Stablecoins, such as UST, were created to protect investors from the extreme price volatility of popular cryptocurrencies; however, when LUNA prices got destabilized, it had an impact on UST prices too.
• In early May 2022, a huge drop in LUNA and UST caused a global crash in the market that led to a loss of around $45 billion within a week.
Terra Founder Charged with Fraud
The Securities and Exchange Commission (SEC) charged Terra founder Do Kwon with fraud following the $40 billion crypto crash. This had an adverse effect on LUNA’s price, which dropped from $1.74 to nearly zero.
Stablecoin System Collapse
Stablecoins, such as UST, were created to protect investors from the extreme price volatility of popular cryptocurrencies like Bitcoin (BTC). With Luna pegged to UST for stability purposes, its decline caused a collapse in the stablecoin system in Q2 2022.
Catastrophic Market Crash
LUNA was among the top 10 cryptocurrencies by market value at one point until its catastrophic collapse in May 2022. The resulting bloodbath saw cryptocurrency markets lose around $45 billion within just one week.
Attempted Price Stabilization
The leadership of Terra attempted to buy Bitcoin reserves in order to purchase more UST and LUNA coins so that their prices could be stabilized; unfortunately this effort failed. Thousands of investors across the globe lost money due to this incident.
Price Prediction 2023-24
As TerraUSD was pegged to Luna and its instability has now been laid bare for all to see, investors will have difficulty trusting any other stablecoin projects or putting faith into Luna’s future performance ever again. Predictions for LUNA’s price are difficult given these circumstances; however it is likely that we will not see it return back up again anytime soon due to lack of trust from investors who may be wary about entering into similar projects again.