LUNA Crypto Prices Tank 90% as Terra Backs New Community Proposals

Investors with skin in the game can agree that buying and holding takes a lot of brass and mental gymnastics. When the market is down, these are the investors saying stocks are not “plunging,” but rather “on sale.” The same goes with crypto investing, although crypto may require even greater mental fortitude. As investors are seeing this week, the nature of crypto is massively volatile; even the most esteemed projects can risk worst-case scenarios. This much is true for Terra (LUNA-USD). The LUNA crypto is taking a beating to the highest degree right now.

A digital rendering of the Terra (LUNA-USD) crypto on top of a circuit board.
Source: Shutterstock

Starting this past weekend, Terra users began to feel a bit uneasy when the TerraUSD (UST-USD) stablecoin lost its $1 price peg for the second time in 2022. Some fast remedying did well to bring prices back up above 90 cents, but the project struggled hard to make things normal again. The network’s guiding organization, the Luna Foundation Guard (LFG), had to move $1.5 billion in assets from its wallet to stabilize the token.

In the days since, though, those efforts are proving ineffective. Now, the network is taking a turn for the worse, with prices drastically falling. And worse yet, it seems as though developers are out of plans, turning instead to community members’ proposals to salvage the crypto.

LUNA Crypto Shaves 99% of Value as UST Sinks Lower

The LUNA crypto began losing this past weekend. However, its losses have picked up significantly in just the last 12 hours. After steadily trading at about $86 a week ago, investors woke up today to a 99% loss for the coin, taking prices under $1 apiece. As of right now, the coin is down 89% in the past 24 hours.

These losses came as the UST token fell once again from its $1 peg. And this time, it’s showing far less of an ability to regain value. Throughout the early morning, UST steadily dropped to a low of about 30 cents. Since then, it has climbed back to around 50 cents. Still, the damage is done as DeFi users rush to exit their UST liquidity pools.

It seems that LUNA crypto developers are less sure of what to do than investors would hope as well. Yesterday morning, Terra network founder Do Kwon said that the network was “close to announcing a recovery plan” for the stablecoin in an attempt to assuage concerns. Then, early this morning, Kwon tweeted a lengthy thread detailing the plan for LUNA and UST.

In the thread, Kwon advocates for a Terra community proposal. The proposal asks to change the burn mechanism of the network to more efficiently burn UST in exchange for LUNA to stabilize UST prices back at $1. However, this proposal does come with the caveat that it will continue to lever LUNA prices down. Still, with their back against the wall currently, developers don’t much have a choice.

At the beginning of the month, UST and LUNA had market capitalizations of roughly $18 billion and $29 billion, respectively. As of right now, their market caps are currently at about $7 billion and $2 billion, respectively.

On the date of publication, Brenden Rearick did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Brenden Rearick is a Financial News Writer for InvestorPlace’s Today’s Market team. He mainly covers digital assets and tech stocks, with a focus on crypto regulation and DeFi.

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