This article explains why Luna crashed and what investors should do in the cryptocurrency crash today to ensure safety and profits.
Any crypto crash is massive news, but the recent Luna cryptocurrency crash has rattled the cryptocurrency market and everyone is wondering why luna crashed. Terra Luna and TerraUSD are the centerpieces of the Luna crypto crash, which has also resulted in a drop in the price of several other cryptos. It is an event that experts claim is a repeat of the 2008 financial collapse of the Lehman Brothers bank.
The Luna crypto crash has spread a wave of panic worldwide. Crypto investors are looking for options on how to handle their crypto.
What is Terra Luna, and why Luna crashed the crypto market?
Luna is an algorithmic stablecoin that uses a specialized algorithm to peg its value to the US dollar and the TerraUSD.
TerraUSD uses the Luna crypto to maintain its value worth 1$, and you can exchange both with one another. Suppose TerraUSD falls and is worth a little less than 1$, people will exchange it for Luna worth 1$ and use the fall in value as profit.
Similarly, if TerraUSD increases in value, they can sell their Luna crypto and exchange it for TerraUSD, which is a little more than 1$ to earn a profit. With several people exploiting the pegging mechanism of Luna and Terra, there is a significant drop in the prices of these cryptocurrencies. This has given rise to the crypto market crash today.
How did the Luna crash take place?
Initially, Terra was popular because of the Anchor protocol that promised 20% yields on Terra. However, Anchor revealed in March that the 20% rate would now be variable and not promised. Investors started dumping Terra and exchanging it for Luna cryptocurrency. Investors also used Curve Finance to exchange Terra for other stablecoins, causing a disbalance in the pegging mechanism, resulting in the fall of both crypto coins.
There is much turmoil, with investors wondering why Luna crashed. The market is extremely volatile, which has been confirmed by the sudden Luna crypto crash. TerraUSD dropped to 23 cents, entering a “point of no return” for both cryptos as Luna is under 10 cents. A significant decrease in its trading which was $100 a few weeks prior.
Both cryptos suffered an all-time low, with TerraUSD reaching $0.14 and Luna dropping to less than 1 cent on Friday.
Expert View: Why Luna crashed, and why is it affecting Bitcoin?
Several experts blame it on a larger orchestration of betting on the Luna crash for profiteering. Others blame Anchor as a failed system. However, you can be certain of one thing, that the crash has shaken investors worldwide.
Investors are riddled with the question, “will crypto crash” and they are not wrong to assume the worst. The panic around the Luna crash is not limited to the Luna coin as Bitcoin is trading near $27000 and has taken a 20% decrease in its trading.
What should investors do following the Luna crypto market crash?
With a largely unregulated financial system that is the cryptocurrency market, investors should not succumb to the pressure and remain. Cryptocurrency always comes with high risks but promises significant returns as well.
Many cryptocurrencies have taken a “loss” but have survived in the longer term. Cryptocurrencies will surely prevail after the crypto crash today and will likely grow in the longer term. Furthermore, regulation is on the way for cryptocurrencies that will prove an asset for investors, protecting them from several risks and boosting the cryptocurrency market.
For investors, it is always safe to maintain a specific percentage of cryptocurrency in their portfolio to protect themselves from risk. Additionally, there is no point in selling their crypto assets in a state of panic for cryptocurrency investors as it is a decision they will regret in the longer term. The cryptocurrency market will survive the Luna crash and bounce back to its glory.
Will crypto crash?
Why Luna Crashed is the question on everyone’s tongue. Investors are grasping their seats, looking for a way out amidst the panic. However, it is worth noting that only Luna has crashed, whereas the rest of the cryptocurrency market’s fall is due to amateur investors pulling out due to shock. You should not follow the crowd; stay sharp and wait it out. The crypto market is here to stay and will prove fruitful in the longer run.
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