The new Luna cryptocurrency is already crashing
A new version of the collapsed luna cryptocurrency is already live on major exchanges – and it got off to a bad start.
Last week, supporters of the Terra blockchain project voted to relaunch luna but not terraUSD, a so-called “stablecoin” that plunged below its planned dollar peg, causing panic in the crypto market.
TerraUSD, or UST, is what is known as an algorithmic stablecoin. It relied on the code and a sister token, luna, to maintain a value of $1. But as digital currency prices plummeted, investors fled the stablecoin, sending the UST plummeting – and taking Luna with it.
At its peak, the ancient luna – now known as the “classic luna” – had a circulating supply of over $40 billion.
Now Luna has a new iteration, which investors are calling Terra 2.0. It is already trading on exchanges such as Bybit, Kucoin and Huobi. Binance, the world’s largest crypto exchange, announces that it will list Luna on Tuesday.
Its launch did not go well.
After hitting a high of $19.53 on Saturday, Luna dropped to $4.39 a few hours later, according to data from CoinMarketCap. It has since settled at a price of around $5.90.
Analysts are deeply skeptical of the chances of Terra’s revived blockchain being a success. It will have to compete with a host of other so-called “layer 1” networks – the infrastructure that underpins cryptocurrencies like Ethereum, Solana and Cardano.
Terra distributes Luna tokens through what is called an “airdrop”. Most will go to those who held luna classic and UST before their collapse, in an attempt to compensate investors.
But many investors burned by the debacle are unlikely to trust Terra a second time, experts say. Vijay Ayyar, international head at Crypto Exchange Luno, said there had been a “massive loss of confidence” in the project.