Terra tumbles by 90% in 24 hours as UST’s recovery loses steam
Terra (LUNA) has continued its sharp decline from the start of the week. The ecosystem which is known for its stablecoins is experiencing its worst crash in months, and there are fears that the worse is not even over. Here are the key latest developments:
LUNA has fallen by nearly 90% over the last 24 hours, following two days of steep losses.
The crash comes as its stablecoin UST lost significant value against the dollar.
UST has fallen sharply again after showing signs of recovery
Data Source: Tradingview
Why is the LUNA crash far from over?
In the last few days alone, Terra (LUNA) has seen a sharp decline of over 170%. The crash is one of the worst in the history of the stablecoin platform. The steep losses were triggered after its main UST stablecoin lost its value against the dollar.
UST is pegged against the US dollar at a ratio of 1:1. At one point, the stablecoin was trading at around 70% less than the value of the dollar. This has sent a lot of LUNA investors panicking and as such, the sell-off has begun. We had seen UST recover slightly but these gains have reversed sharply.
LUNA will face significant selling pressure. The confidence that investors had in UST is now severely dented, and it will take time for the coin to recover from this. As of now, expect sharper declines in the token price over the coming weeks.
What’s the long-term outlook for Terra?
Despite the UST debacle, Terra still remains one of the biggest stablecoin platforms in the world. However, there is no doubt that this incident will have far-reaching effects on LUNA’s price in the short term.
But we expect the platform to recover in the longer term, and once UST is able to regain its 1:1 ratio against the dollar, investor confidence will certainly improve.