Terra Tumbles 96% as It’s Stablecoin Loses Dollar Peg, Panic Sets In As 4Chan Promotes Shorting Coin
Panic, capitulation and utter fear took hold of those having the crypto coin Terra in their portfolio yesterday. The blockchain protocol, until recently trading in the top 10 on CoinMarketCap, lost most of it’s value right after it’s very own stablecoin UST lost its peg to the United States dollar. Rumors are circulating that a coordinated action was behind Terra’s loss, though these remain unproven theories at this point.
Do Kwon, Terra’s creator, had boasted just a few months ago that his fund (Luna Foundation Guard) would buying up Bitcoins in order to support UST in times of crisis. As CNBC noted yesterday already, the fear then became:
That Luna Foundation Guard dumps those bitcoins onto the market, resulting in an even bigger sell-off.
Given UST’s massive fall in response, the value of BTC/UST reached a level of $140,000 on the world’s biggest crypto exchange Binance. In response, withdrawals of both LUNA and UST were suspended.
2/ I understand the last 72 hours have been extremely tough on all of you - know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this.— Do Kwon 🌕 (@stablekwon) May 11, 2022
Trying to soothe the nerves of investors who had seen Terra trade at $120 only a month ago, founder Do Kwon said on Twitter that he understood:
The last 72 hours have been extremely tough on all of you – know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this.
Social media platforms like WallStreetBets on Reddit and darker websites like 4Chan were buzzing with comments to short the crypto coin.
According to The Independent, the Reddit forum of Terra was full of people claiming to have lost their life savings.
At the time of writing, Terra’s Luna coin traded at $0.20.