Will LUNA recover?

Cryptocurrency Terra (Luna) collapsed by more than 99%. For now, the main problem remains whether LUNA will recover?

The value of the coin fell sharply from Wednesday to Thursday from $ 6.75 to $ 0.013.

Here’s what caused the crash and what you need to know about the coin in the future.

Why did LUNA collapse?

Luna collapsed due to a peg to TerraUSD (UST), a stablecoin pegged to the U.S. dollar.

Stablecoins are cryptocurrencies associated with traditional ones. Earlier this week, the UST broke away from the dollar, causing its price to plummet.

Luna’s market cap has shrunk from $40 billion to $200 million.

Leading cryptocurrency exchange Binance temporarily suspended the withdrawal of funds to the Luna coin on Wednesday.

The coin’s crash comes amid a general decline in the cryptocurrency, with many coins losing a quarter of their value in the last 24 hours.

Investors seem to be moving away from cryptocurrency to less risky investments in the face of global inflation.

Shares of Coinbase, the largest crypto exchange in the U.S., fell 15.6% overnight on Tuesday after it reported a net loss of $430 million, far worse than analysts had expected.

Coinbase cited “a downward trend in crypto asset prices and volatility that began in late 2021,” but was quick to point out that it does not expect these conditions to be “permanent.”

The news raised questions about whether the market had reached the expected cooling period, formerly called the “crypto winter,” or a more permanent cold, perhaps a “crypto ice age.”

Simon Peters, cryptocurrency market analyst at trading platform eToro, said:

“Right now, investors in crypto assets are worried about when the recession will end.

The market is facing broader difficulties for investment markets that are struggling to decide where comfortable levels are following an interest rate hike designed to quell soaring inflation across the Western world.”

Will LUNA recover?

The coin has potential for recoveryhowever, at present the situation is extremely uncertain.

Do Kwon, founder and creator of Terra Terraform Labs, tweeted Tuesday:

“Close to announcing a recovery plan for $UST. Hold tight.”

On Wednesday, he added:

“I understand that the last 72 hours have been extremely difficult for all of you – know that I am determined to work with each of you to withstand this crisis and we will come out of it.”

“The Terra ecosystem is one of the most dynamic in the crypto industry, with hundreds of passionate teams creating apps that define categories within. Terra’s return to form will be an exciting sight.”

Investment advice website Investing Cube suggested that there is “good chance”that the cryptocurrency will recover.

Analyst Calvin Maina wrote:

“For Luna to recover, they will need to solve the problem and clearly show that such a fall will not happen again. As an analyst, I expect Luna prices to rise sharply after the UST returns to the dollar peg. I also expect prices to start recovering after the Terra project shows that there will be no such problems in the future.”

Members of The Moon’s loyal subreddit mourned their losses on Reddit. A subreddit is a child theme or category on the Reddit website.

“I lost more than $450,000, I can’t pay the bank,” one of them wrote, while others mentioned they could lose their homes.