After a major crash that shocked the cryptocurrency community, the Terra (LUNA) token has witnessed a pumping activity as some investors are betting on the cryptocurrency’s resurgence. So why did this pump originate?
What caused the LUNA pump during the day?
LUNA is a token developed by Terraform Labs in conjunction with the algorithmic stablecoin Terra USD (UST) to maintain its $1 stablecoin. Between May 9 and May 14, the UST lost the $1 peg to fall to $0.15, shedding 85%.
UST 30-day price chart / Source: CoinGecko Kriptokoin.com As you can see from the news, LUNA broke out of the dollar earlier this week and fell below a cent. It crashed due to its connection to UST. The LUNA’s price fell 99% from $62 on May 9 to less than a cent on May 14.
LUNA 30-day price chart / Source: CoinGecko LUNA traded at $0.0004, up 364% during the day, according to Coinecko data. At one point, the token gained 2,000% despite the overall cryptocurrency market trading in a volatile state.
LUNA 24-hour price chart / Source: CoinGecko It can be assumed that this is due to difficulties in shorting the . The scenario is based on short positions that borrow large amounts to sell it short at a certain price, creating the perfect environment for the token to rise in value.
Terra founder apologized
Pump also coincided with Terra’s founder Do Kwon’s apology to investors and the general LUNA community. Kwon stated via his Twitter account that unlike other crypto scams where the founders make huge profits before the assets depreciate, they did not benefit from the crash.
1/ I’ve spent the last few days on the phone calling Terra community members – builders, community members, employees, friends and family, that have been devastated by UST depegging.
I am heartbroken about the pain my invention has brought on all of you.
— Do Kwon 🌕 (@stablekwon) May 13, 2022
Some crypto watchers and investors are now considering Terra in 2021. they liken it to meme coins like the Shiba Inu, which has seen a significant increase in value. Due to the panic caused by the collapse of Terra, there are fears that cryptocurrencies like SHIB may suffer the same fate due to the lack of real use cases and the dominance of whales.
Following the collapse of Terra, it was also revealed that Do Kwon has a history of unsuccessful stablecoins, including Basis Cash, which will be pegged to the US dollar. However, the stablecoin failed to do so after trading below $1.
