Terra is an algorithmic stablecoin platform that allows developers to create stablecoins that are based on different currencies such as the US dollar and Euro. In February and April, the value of the Luna token increased by over 233%.
Since May, the value of the Luna token has decreased by over 99.9 percent. It was valued at around $80 a couple of weeks ago.
Due to the fall in the prices of cryptocurrencies, a rush was seen on the Terra stablecoin. It was created to maintain a certain amount of value by relying on the supply and demand dynamics of the market. Unfortunately, due to the lack of confidence in the platform, the stock price of Luna fell.
It’s hard to restore a stablecoin’s reputation after it has been tarnished, especially when it has become less popular. This is why it’s possible that investors might still give it another try following its recent popularity. The Luna Foundation Guard, the organization that houses the fund's reserves, has vowed to increase its assets in the future.
Although it's possible that the Luna will recover and become a better investment in the future, it's still a risky proposition. The risks associated with investing in the Luna exchange rate are high. However, it's possible that the currency could recover and become a better long-term investment.
Before making any financial decisions, it’s important that you thoroughly study the market. Doing so will allow you to make informed decisions and avoid getting carried away.
Why did Terra crash?
Despite the recovery in the cryptocurrency market, stablecoins are still in for a rough time. Terra Luna failed due to the founder's belief that it was an asset that should be backed with an extremely volatile currency. Among the prominent investors in the industry, including those from Celsius, Galaxy Digital, Jane Street, and Jump Crypto, were investors who believed that this asset was a good idea.
With the founder's high expectations, the market eventually took a turn for the worse. Many warnings were presented to the founders of Terra Luna about its potential failure. One of the most common warnings was that the 20% annual rate of return offered by the Anchor protocol was unsustainable. Despite this, Terra investors kept their faith.
Aside from this, this wasn't the first time that Terra Luna's UST fell off its dollar peg. In 2020, the token lost value and caused mass panic in the financial industry. Despite this, Do Kwon, the founder of Terra Luna, still claimed that his project was still alive.
There are various theories regarding the collapse of Terra Luna. One of these is that asset management firms Blackrock and Citadel carried out a cyberattack on the company. According to some reports, they used a Bitcoin exchange to borrow $100,000. These two funds had a large amount of UST.
The two decided to dump all of their cryptocurrencies when the timing was right. This caused a massive decline in the value of the assets, and it triggered a sell-off. Blackrock thought that Anchor, which had a lot of Terra Luna, would crash due to the issue with the 20% annual rate of return that it gave out.
No matter how true this story is, one thing is certain: Terra Luna was always a vulnerable, fragile ecosystem.
Can you still buy Terra from Australia?
On May 12th Terra delisted its coins LUNA & UST from Major Exchanges. At that time it was advised not to invest in this coin until the company announces any major updates. However, since then LUNA has been re-listed on several major exchanges including Coinspot, Binance and many more.
Source - [CryptoBuyGuides}(https://www.cryptobuyguides.com/blog/should-i-still-buy-terra-luna)