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Turnaround Opportunity?: Terra LUNA Coins Surge Over 100 Percent: Is LUNA Poised for a Major Comeback? | news

• Terra crash wiped out $50 billion
• LUNA Coins are now virtually worthless
• Small investment inflows have a large impact on LUNA price

A LUNA coin cost up to 119 US dollars in mid-April, and the market capitalization at times exceeded the 40 billion mark. But the coins are miles away from that now. On May 21, the market cap was just $680 million. After all, the LUNA course has been able to consolidate at an extremely modest level in the last few days. A LUNA now costs $0.0001599, which puts the market cap at $1,049,872,002. (As of May 24, 2022). Some remaining LUNA investors are hoping for a mega comeback – rightly so?

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The double Terra crash

The nightmare for Terra investors, which has not ended to this day, began on May 9th. Within a few hours, the supposed “stablecoin” Terra UST crashed, although it is actually aiming for parity with the US dollar. The Terra UST is now worth just $0.06866. More precisely, it is a double crash.

Namely, the UST-related coin LUNA aims to maintain the parity of the UST to the US dollar. This works using a complex algorithmic system where the supply and demand for LUNA guarantees parity of the UST to the dollar. A UST always has the equivalent of a dollar in LUNA. Owners can always “burn” $1 worth of UST and mine $1 worth of LUNA in an arbitrage deal at a fixed exchange rate. For example, the supply of UST tokens may be tightened, causing price inflation and maintaining parity with the US dollar. In contrast to the established stablecoins Tether and USD Coin, “algorithmic stablecoins” therefore have no physical financial reserves that could cushion a potential crash. When the UST could no longer maintain its parity with the US dollar, a large number of LUNA tokens had to be “reprinted”. This led to hyperinflation and thus to a fall in value of the LUNA coins. A week-long negative spiral began, from which Terra has not yet been able to break out.

LUNA-Coins: Before total failure or mega comeback?

But as is well known, those who are said to be dead live longer – this could possibly also apply to the LUNA coin. However, crypto experts often suspect that – if at all – only the UST stablecoin can still be saved, while the LUNA is doomed to die. So far, the price development has hardly allowed any other conclusion. It had been steadily downhill for days until the price more than doubled in just under twenty hours on the weekend of May 21st and 22nd. At the bottom, only $690 million was invested in LUNA, after less than a day it was still $1.4 billion. Who are the investors behind the $700 million in capital inflows? Who trusts the cyber motto, which is actually considered a failure, to give a cent?

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Which speculators are behind the price jump

According to information from “BTC-ECHO”, it is mainly small investors from South Korea who are speculating on a trend reversal in the LUNA coins. The advantage is that even comparatively small sums – such as only 700 million US dollars from Saturday to Sunday – are sufficient to trigger enormous price jumps. Such an investment volume would have much less impact on the major cryptocurrencies such as Bitcoin, Ether or Ripple (XRP).

Therefore, the LUNA price jump should not be overestimated – there seems to be no sign of a broad reinvestment in the coins, especially since the price this week was not able to continue its upward trend from the weekend. On the other hand, the small market capitalization also offers an opportunity for small investors who could potentially make large profits with small dollar amounts.

But many experts urge caution, most crypto connoisseurs such as Ethereum co-founder Vitalik Buterin assume that the Terra ecosystem will soon come to an end, and the LUNA would then probably become completely worthless. Then interim comeback dreams would burst like soap bubbles.

Terra founder Do Kwon faces confiscation of his real estate

Most recently, the allegedly pending court case against Terra founder Do Kwon illustrated the toxic situation in which the company Terraform Labs, which is behind the LUNA coins, finds itself. South Korean investors, who make up a particularly high proportion of (former) Terra investors, want to take legal action against Terraform Labs CEO Do Kwon. As “BTC-ECHO” reports, they intend to confiscate his property because the Terra founder cheated Terra investors. Kwon had already planned a liquidation in 2021 in order to take its stake out of the “house of cards” Terra. Kwon could also face a fine of 100 billion South Korean won (about US$78 million) for tax evasion.

The coming months will show whether the sharp allegations are true. The fact is, however, that a lot of educational work is still required for a successful turnaround of the LUNA coins, for which it is essential to regain investor confidence.

Editorial office finanzen.net

Image sources: Wit Olszewski / Shutterstock.com

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