Several cryptocurrencies, including Bitcoin and Ether, saw their value drop dramatically this week in an unprecedented slump.
One of the hardest hit is Terra (LUNA), formerly one of the top 10 most valuable cryptocurrencies.
Its value fell by more than 98% in a single day, with its market capitalization dropping by $39.5 billion (€28.3 billion).
Panicked investors woke up this morning to see their savings wiped out, according to frantic posts on the coin’s popular subreddit.
Investor desperation
the r/TerraLuna subreddit has been inundated with messages and comments since news of the crash broke. Some claim to have lost thousands of dollars in the crisis.
A poster said they lost $15,000 in the accident, saying they had hoped to use the money to put a deposit on a house for their family.
“I really believed in this project. So sad… I should have cashed in [out] when it was $100, I would have been up to $25,000. But I got greedy hoping to get more money.
Another said: “I lost all my savings. Had bought Luna for $85. I do not know what to do. Lost about $5000 it could be [a] small amount for some but that was all I had. Someone please advise what should I do next? »
Several messages refer to the threat of homelessness, bankruptcy or suicide. “I lost more than 450,000 USD, I cannot pay the bank. I will soon lose my house. I will become homeless,” it read.
The forum’s moderators posted links to national helplines, urging its 50,500 members to “reach out and not lose hope”.
What is Terra (LUNA)?
Terra (LUNA) was created in 2018 with the goal of creating a more stable cryptocurrency without some of the wild price swings of other options.
How it works is a bit complex. The currency is made up of two halves – a “stablecoin”, Terra, which is pegged to the US dollar. Meanwhile, the “cryptocoin”, Luna, is freely traded on the market.
The value of the two coins are linked in a way that should theoretically provide a counterbalance in the event of a drop in value.
However, this turned out to be catastrophically wrong. The crash is underpinned by another type of cryptocurrency, UST, which was also pegged to the dollar. As crypto markets crashed this week, investors rushed to pull their money out of UST, destabilizing Terra (LUNA) beyond repair.
At the end of the line
This is by no means the first time that cryptocurrencies have experienced dramatic collapses in value.
But many observers believe that this week’s crash could spell the beginning of the end of the crypto craze.
Of the 100 most valuable cryptocurrencies listed today, only 10 haven’t fallen in price in the past 24 hours, according to Coin Market Cap The data. Many have lost half or more of their value over the past week.
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