Why Terra Luna crashed 98% in a snap? Massive crypto fall signals worrying signs

Terra Luna's crash has made several investors poor overnight. Read why Terra Luna crashed inside.

New Delhi: Terra (Luna), a popular cryptocurrency, has witnessed a dramatic fall in its valuation, from more than $400 billion to about $500 million, in a matter of few hours, making investors lose their life savings in just a snap. The crash of Terra (Luna), which was once ranked among the top 10 most valuable cryptocurrencies, has wreaked havoc on the crypto industry, with several investors now living in the fear of becoming homeless in the aftermath of the tragic mayhem.

Terra (Luna) had reached its all-time high of about $120 last month. But with the recent crash, the cryptocurrency’s price has dropped below $1, in what could be seen as a first collapse among top crypto coins. 

"I lost all my life savings. Had bought Luna at $85, not sure what to do," a Terra investor said on the Reddit community forum. This is just the story of a single investor. Several other investors have lost thousands of dollars with the sudden collapse of Terra (Luna).  

For instance, another investor, who was trying to sell the crypto coin when it was more than $100 last month, lost $15,000 in the mayhem. "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," the user posted.

Many other investors are sharing their unfortunate stories on social media platforms, especially Reddit, where there is a dedicated community discussing investments in Terra (Luna). 

On the Reddit forum, another user pointed out losing more than $450,000. “I cannot pay the bank.” Another user, quoted in an IANS report, said: "I will lose my home soon. I’ll become homeless."

Meanwhile, crypto platforms have started taking steps in response to the fall of Luna. For instance, the world's biggest crypto exchange, Binance, has temporarily suspended withdrawals on Terra.

Why led to the Terra Luna Crash?

Terra Luna’s crash began when the cryptocurrency’s algorithmic-based Stablecoins TerraUSD, which pegs itself against the dollar, started plummeting. The fall in TerraUSD may have led to a large scale selloff of Terra Luna, which eventually resulted in the price crash. Also Read: Retail inflation soars to 8-yr high of 7.79% in April

Terra creators Terraform Labs founder Do Kwon said he understood that the last 72 hours have been extremely tough on investors. “...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," he said in a tweet. Also Read: Industrial production grows 1.9% in March, 11.3% in 2021-22