What happened to the LUNA (Terra) in this week | By @steemdoctor1

steemdoctor1 (76)in STEEMIT PAKISTAN • 3 years ago

Hello everybody.

I hope that all of you will be healthy and good and enjoying your best health with the grace and blessings of Almighty Allah. I pray for Allah Almighty to keep all of us healthy and wise. Today, I will discuss the most uttered question by the cryptocurrency lovers today What happened to the LUNA and the UST? So, I will discuss it according to my research and views.

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As we all know that Bitcoin is facing a considerable dump these days and it is understood that the values of the altcoins also decreased along with the most prominent cryptocurrency, Bitcoin. But we cannot believe that the most successful cryptocurrency of the time, LUNA, is undergoing a very colossal loss these days. The value of the stable coin of Terra blockchain, TerraUSD (UST), and LUNA coin is also facing an unbelievable dump these days.

Actually, the Terra blockchain is the most successful and the most popular blockchain of the time that supports various stable coins including the UST, many projects, and ecosystems as well. The UST stable coin and the LUNA coin are related in such a way that the algorithm used there is used to maintain the value of the UST coin pegged to the US dollar.

Just like all other stable coins, the UST coin always trades with a ratio of 1:1 with the US dollar. In the Terra blockchain, the value of the stable coin is stabilized by the burning of the LUNA token. It is very interesting to know that the UST coin and the LUNA token can be easily swapped with each other. It is a very impressive thing to know that if we purchased a UST when it was trading at $0.98 and then we swapped it for LUNA tokens, we will get the LUNA token for $1 worth, and the remaining $0.02 will be the profit of the trader.

Now, comes our original discussion that what are the factors beyond the huge loss in the value of the UST as well as the LUNA coin. On 6 May, the Bitcoin dump started and the overall market experienced a total downward movement of about 7.46%. Since that time, the decrease in the price of LUNA and UST coins started.

After that, the downward movement of the LUNA token and the UST coin gathered momentum when the whales of the market of UST stable coin began to sell the coin on various exchanges and platforms. Till the night of May 8, a huge amount of UST had been sold which is approximately $286M. At the same time, the whales of the market began to open their short positions on the LUNA token as they know that the price of LUNA and UST move accordingly, as explained above.

The UST stable coin loses its 1:1 ratio and was present at $0.98 on the night of 8 May. The LUNA token was also down about 6% and had reached $76. On May 9, the LUNA coin loses too much volume and was traded for only $45. That was about a 60% loss of the LUNA coin. Similarly, the UST coin also experienced a huge loss and was traded at $0.68.

On May 10, the development and the management of the Terra blockchain tweeted that they will be loaning about $750M of the worth of BTC. This announcement was made to improve the standing of the Terra coins and to manage a market maker condition by repurchasing the LUNA and UST coins.

Unfortunately, the efforts of the Terra team were not successful till now as the sellers are leaving the market on every minor high, and thus the market of LUNA is decreasing warmly. According to the news coming from various resources, the team has announced that the reserved amount out of the total loam $750M is just $125M. This reserved amount is divided into the Avalanche (AVAX) and the stable coin, UST. Have a look at the current capitalization of LUNA and Terra coins.

Current Market.Cap of LUNA

Currently, the LUNA token is trading at $0.97 which is about down 97%. This is really a massive loss in the history of cryptocurrency.

Current Market.Cap of UST

Currently, the UST stable is trading at $0.35 which is about down 61%. This is also a very huge loss in the history of cryptocurrency.

So, these are the major reasons behind the huge loss in the Terra coins. We can conclude that this massive loss is due to the selling of the whales on the UST market and the short trades on the LUNA market at the same time.