Market bleeds as LUNA nears $0

Valued at $119.22 at its peak, LUNA

MOON
the sister asset of the troublesome cryptocurrency TerraUSD

UST
collapsed to almost $0 overnight.

As of 10:45 a.m. ET, the token is trading at $0.005 with a market cap of $56 million, according to CoinMarketCap, a dramatic drop from $28 billion just a week ago. TerraUSD (UST), designed as an algorithmic stablecoin that should always be worth $1, lost its peg to the US dollar last week, falling to as low as 36 cents. It is currently worth $0.39.

The loss of investor confidence seems to have triggered a series of additional withdrawals from the Anchor Protocol, a lending market that offered returns of up to 20% to users who deposit UST. Since Friday, Anchor’s total deposits have fallen from $14 billion to $2.2 billion. To stop the “depeg death spiral,” protocol contributors proposed cutting interest rates to a target of 4%.

Among other measures, the developers of Terra offered to “burn”, or take out of circulation, nearly 1 billion UST while increasing the amount of LUNA available, which acts as a stabilizing mechanism to help the price of UST return to $1 when it drifts, to relieve pressure. Meanwhile, LUNA supply has increased 20-fold today to $25 billion (the falling price of UST caused additional LUNAs to be minted and issued on the open market).

Also, the world’s largest stablecoin and a centerpiece of global cryptocurrency trading, Tether

USDT
which unlike Terra claims to back its tokens with real dollar reserves, also moved away from its $1 peg on Thursday.

The cryptocurrency market has lost another 11% of its market capitalization, which now stands at $1.2 trillion, as traders have lost almost $1 billion in liquidations in the last 24 hours, according to data from Coinglass. The largest cryptocurrencies by market share, bitcoin and ether, are trading at $29,346 and $1,999 respectively.

“Calling the bottom of this bear market is impossible, and I wouldn’t trust anyone who claims to be able to predict the future,” says Derek Lim, head of crypto insights at cryptocurrency exchange Bybit. “However, if we look at past data, even during the worst market downturns, Bitcoin

BTC

BTC
has found support at the 200-week simple moving average (SMA), which is currently just over $21,000, and this is a good indicator of what could be a worst-case scenario.”

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