The more miserable, this is the culprit that made Terra Luna plunged 98%

Jakarta, CNBC Indonesia The Terra LUNA crypto token is currently trending and is being talked about a lot by people. That’s because the Terra LUNA cryptocurrency has just plunged 98% in the past week.

The price of this crypto asset, which was once the prima donna of investors, fell by 96.39% in the last 24 hours of trading on Thursday (12/5/202) yesterday. Quoted from CoinmarketCap, Thursday (12/5), at 13.00 WIB Terra LUNA was traded at US$ 0.32 or the equivalent of Rp 4,659 per coin.

CoinmarketCap noted that Terra Luna traded at US$1.18 per dollar on Thursday (12/5/2022) at 10.12 WIB, even though it had touched US$ 86.7 per coin.

For information, a crypto asset named Terra with trading code LUNA is a blockchain-based project developed by Terra Labs in South Korea. His ambition is to create a stablecoin linked to the official money of the central bank.

Terra aims to support global payment systems with fast and affordable settlements such as Alipay on the Blockchain.

When it was first issued it was valued at US$0.8 per coin and hit an all-time high of US$119.55 per coin in April. In fact, it was once the crypto asset with the largest market capitalization of US $ 40 billion.

Terra LUNA has a vital role to play in stabilizing the price of the Terra stablecoin and reducing market volatility. When the stablecoin drops slightly then Terra LUNA will be burned as a way for prices to stabilize.

One of the most popular Terra stablecoins today is TerraUSD with the trading code UST, quoted from CoinDesk, Friday (13/5/2022).

TerraUSD is a stablecoin project linked to the US dollar exchange rate. The token offers a better store of value to avoid cryptocurrency volatility. The developer offers a target of one coin worth US$1.

However, it turned out that the price of TerraUSD fell below US$1, on Wednesday (11/5/2022) only 26 US cents. But eventually strengthened to 80 US cents, but still below the bargained target.

So far, the cause of the decline in the price of TerraUSD has not been confirmed. However, this incident also dragged the price of Terra LUNA down.

Do Kwon, the coin’s creator, is trying to set things right trying to get TerraUSD back to its target price of US$1. The trick is to increase the new Terra LUNA minting rate per day, which is to allow the supply of stablecoins to run out.

“I understand that the last 72 hours have been extremely difficult for all of you – know that I am determined to work with all of you to resolve this crisis, and we will build a way out of this,” he said.

Investors expect new capital injections with the aim of boosting the project. TerraUSD backers are even reportedly seeking to raise more than US$1 billion in funding.

However, the international head of crypto exchange Luno, Vijay Ayyar, said Do Kwon’s announcement did not create a confidence boost for investors.

“They are letting the system run out of steam in the hope that investors will re-enter when the ‘excess’ supply of TerraUSD is exhausted,” Ayyar said.

Do Kwon is known to have accumulated billions of dollars worth of Bitcoin in his Luna Foundation Guard. With the aim of supporting TerraUSD in times of crisis.

The fear is that now Do Kwon will dump Bitcoin into the market and result in a bigger sell-off.

TerraUSD is listed as a major player in the stablecoin algorithm with an estimated supply of 16 billion tokens. Though the sector is regarded as a recent phenomenon.

David Moreno Darocas, research analyst at CryptoCompare, explains the fragility of the stablecoin. According to him, TerraUSD has developed into something controversial in the crypto ecosystem.

“TerraUSD has grown to become an integral and controversial part of the crypto ecosystem,” he said.

[Gambas:Video CNBC]

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