Are the days of the former crypto star finally numbered?

Terra (Luna): Terra’s massive price crash buries hopes of a comeback

• The price of Terra crashed south in an unprecedented manner in the last week of trading, impressively showing that investments in cryptocurrencies that were believed to be safe are also subject to a high risk.
• After Terra Labs failed with its Luna Foundation Guard (LFG) at the beginning of last week to peg the in-house algorithm-based stablecoin TerraUSD (UST) back to the US dollar value, all investors began to save what could still be saved. Not only did investors part with their Luna Coins and TerraUSD holdings en masse, but also the opening of large short positions, so-called short sales, pushed the LUNA course southwards.
• As a result, the price of Terra continued to collapse, so that several crypto exchanges such as binance and FTX temporarily suspended trading in Luna and disabled the ability to short invest.
• With another attempt to achieve “re-pegging” by selling Bitcoin stocks, Terra experienced hyperinflation in the following days, which caused the LUNA price and thus also the market capitalization to plummet.

The downward spiral continues

• In the meantime, even the Terra blockchain had to be deactivated several times to prevent an even faster sale.
• Although the LUNA course, driven by daring gamblers, has been able to recover minimally in the last few days, the sheer number of Luna coins in circulation make an increase to old strength impossible.
• In its current form, the project must be regarded as a failure, and investor confidence has been destroyed forever.
• Of the last twitter post from today, Monday, May 16, confirms this impressively.
• According to the latest statement by the Luna Foundation Guard, all but 313 BTC bitcoins were exchanged via the crypto exchanges binance.com and Gemini, which also caused the Luna Foundation Guard’s capital base to collapse massively and limited its room for maneuver to a minimum.
• The Luna Foundation Guard currently still owns 313 Bitcoins (BTC), 39,914 Binance Coins (BNB), 1.97 million Avalanche (AVAX), 1.8 billion TerraUSD (UST) and 222 million Terra (LUNA).

The last rescue attempt

• Although the Foundation plans to return all staked Luna coins to their owners within 20 days, this announcement is no more than a drop in the bucket as they are almost worthless.
• Also, the intention to liquidate the remaining cryptocurrencies to compensate remaining UST holders sounds like a last-ditch effort to placate investors given the investor losses. The equivalent value of the cryptocurrencies still held by the LFG is currently less than 100 million US dollars and should not be close to enough to regain investor confidence for a new Terra blockchain.

How should investors act now?

• From an investor’s point of view, the very low LUNA price seems predestined for an entry, but experience teaches that you don’t throw good money after bad.
• Although trading in Luna has resumed on Binance.com and FTX.com, it is now the market makers on the exchanges themselves who are artificially creating fictitious volatility.
• Therefore, an investment in Luna is strongly discouraged, especially with higher sums, investors should no longer invest here.
• If you really want to try it, you should invest a maximum of one percent of your total investment capital. The probability that Luna will submerge further south is too great. At the latest when the staked and currently still locked Luna coins come onto the market, another price slide is inevitable.

Disclaimer: The price estimates presented on this page do not represent buy or sell recommendations. They are merely an assessment by the analyst.