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Terra (LUNA) coin came tumbling down all the way from $120 to less than 1 dollar cent following a Soros-inspired attack that saw the conspirer take away more than $800 million. The attack took place through the accumulation of at least $1 billion of Terra Network’s algorithmic stablecoin, UST. Followed by borrowing at least $3 billion worth of Bitcoins. The attackers went on to spread a Fear, Uncertainty and Doubt about alleged bank runs and peg manipulations. Later on, the alleged attacker dumped the $3 Billion worth of BTC, which went on to trigger a worldwide panic across the crypto industry.
Terra Luna’s Market Volatility
LUNA’s meltdown pulled with it the majority of the cryptocurrencies, as BTC hit a 3-month low of $26K. Meanwhile, at its lowest figures, the market choppiness index for Terra coin was at its highest. Either falling by huge margins or increasing its price by 3000%+. The result has been a crypto-wide tension over the risk associated with algorithmic stablecoins such as the UST. However, another implication has been the realization that small-holder crypto traders suffer the biggest risk in case of market manipulation. There are others who claimed to have lost their life savings (about 98% of LUNA investors) during the debacle.
Lost Life Savings
According to this article that appeared in the Business Standard, several small-holders testified to losing their life savings; or money they were saving to buy a home. Nonetheless, despite liquidating most of these investors’ hard-earned money; the drop was big enough to wipe away an entire crypto whale. The recent situation shows a sinister risk across the cryptocurrency market. Increasing consolidation of any coin by large holders could potentially increase market volatility. When these large holders either sell or dump their coins, the market becomes receptive to rapid price swings. Meanwhile, Terra founder Du Kwon claimed they were working on restoring the price of the coin; by countering increased dilution on the $LUNA token. This can only be possible if the team is able to reduce the current peg pressure on Terra’s stablecoin $UST. Burning the UST is one of the most preferable options at the moment