Terra Luna stablecoin collapses 99% overnight as crypto investors lost their life savings
It’s a bloodbath Wednesday for cryptocurrency and stablecoins. Earlier today, we wrote about the carnage in the crypto market after Bitcoin fell to a little above $29,000. Since then, the world’s most popular cryptocurrency has fallen further to $28,555.90 as of the time of writing. However, the collapse of stablecoin Tera Luna is not receiving a lot of attention.
As you may recall last week, we wrote about The Luna Foundation Guard after the company behind TerraUSD (UST) stablecoin acquired $1.5 billion in bitcoin to bolster reserves of its popular stablecoin. Terra’s luna is a stablecoin designed to support UST’s one-to-one peg with the U.S. dollar.
Fast forward a week later, the price of the TerraUSD (UST) stablecoin has fallen by more than 99 percent, wiping out the life savings of crypto investors as traders offload the cryptocurrency. Terra, which ranked among the top 10 most valuable cryptocurrencies, dropped from its $120 peak last month to below $1 on Wednesday.
According to posts on the popular aggregation platform Reddit, the majority of the losses happened overnight, with a 98 percent price fall in the space of just 24 hours. The sudden crash meant Terra’s market cap dropped from above $40 billion to just $500 million, resulting in unprecedented losses for investors in a leading cryptocurrency
Terra collapse also sent shockwaves to the entire crypto market causing billions in losses to bitcoin and alt currencies like Ethereum and Solana. The crash also caused mass destruction in ASTRO, ATOM, MARS, OSMO, and other DeFi-related protocols.
In a post on Reddit, one member of the r/TerraLuna sub-Reddit wrote: “I lost all my life savings. Had bought Luna at $85, not sure what to do.”No one knows if the sudden crash is due to a rug pull. Meanwhile, the moderators of the Reddit forum, which has more than 44,000 members, pinned a post with helpline numbers to the top of the page.
Another Redditor also wrote that they had lost $15,000 after failing to sell their holdings for a substantial profit when it was trading above $100 last month.
“I should’ve cashed out when it was $100, then I would have been up $25,000,” wrote Reddit user No-Forever. “But I got greedy hoping to get more money so I can at least afford a downpayment for a house for my family. I guess no house and savings then.”
“I lost over $450,000, I cannot pay the bank,” one user member of the Terra forum wrote. “I will lose my home soon. I’ll become homeless. Suicide is the only way out for me.”
Just last week, UST, which was the biggest algorithmic stablecoin by market value, had a market capitalization of around $18 billion.