The Terra cryptocurrency, or better known as Luna, experienced a major collapse this week, with the value of the digital currency falling more than 99%.
Luna’s value fell dramatically on Wednesday from $6.75 to just over a dollar, and on Thursday afternoon, the currency’s value fell further, to just $0.02.
Investors who have accumulated Luna are wondering if the currency will recover ever after YouTube and music star KSI revealed he lost millions.
Speaking to his 7.5 million followers, he tweeted: “What a week! I went to the funeral of my hamsters, I performed in front of thousands of people at Wembley Arena with Anne Marie, my $3 million from Luna is now worth some $100. And it’s only Thursday.” Why did Luna collapse?
Luna collapsed due to its connection to terraUSD, a stablecoin linked to the US dollar.
Stablecoins are digital currencies linked to a traditional currency and when the UST decoupled from the dollar earlier this week, prices fell.
In recent days, Luna’s market value has dropped from $40 billion to $400 million, leading cryptocurrency exchange Binance to temporarily suspend Luna’s withdrawals on Wednesday. Will Luna recover?
Of course, the coin has the potential to recover, but it comes at a time of uncertainty in the market.
There is currently a general decline in cryptocurrencies, with many coins having lost a quarter of their value, as investors seem to be turning to safer investments in the current financial market environment.
Terraform Labs founder Do Kwon tweeted this week: “We are about to announce a stimulus package for $UST. Hang on.”
He then added: “I understand that the last 72 hours have been extremely difficult for all of you – know that I am committed to working with each and every one of you to overcome this crisis, and we will build our path to get out of it.
“The Terra ecosystem is one of the most dynamic in the cryptocurrency industry, with hundreds of passionate teams building category-defining apps within it… Terra’s return to form will be a sight to behold. »Are cryptocurrencies safe?
Martin Lewis addressed the issue of cryptocurrencies in his show The Martin Lewis Money Show last year. He specifically mentioned bitcoin, but the warning applies to any form of cash online.
He said: “Bitcoin is designed as a currency – a non-governmental currency – so you’re supposed to be able to spend it, but I guess you don’t think about it to spend it, but rather as an investment, which is what most people envision.
“First of all, is it safe? Well, some people have lost money in their wallets. Like gold, it can be stolen, and cryptocurrencies are a bit like an equivalent of gold, as it’s a store of value of what people put into it. You have to be very careful. »
He added: “As for whether it’s good, I’m not talking about investment. The problem with investing – and bitcoin is an investment – is that prices go up and down. With bitcoin, they go up massively and down massively. And the reason I insist so much on this point is that you can earn a fortune, but you can also lose a fortune.
So if you can’t afford to lose the money you put in, then don’t invest in it. It is a gamble, like all forms of shares and units, and all forms of investment and investment in gold. It’s your choice, but if you do it the right way, the investment should work for you, but that doesn’t mean you won’t lose money.