Terra Network’s LUNA token fell as much as 65% in 24 hours after it’s stablecoin UST collapsed, pushing LUNA’s price to levels below $17
LUNA Struggles To Recover
On May 8, LUNA, the native token of the Terra ecosystem, was trading at $65. However, Terra’s dollar-pegged stablecoin, the UST, has lost its anchor. UST’s value dipped below $0.70 yesterday and has been struggling to recover since then. Following a short surge to $0.93, the price fell down to $0.75.
Terra co-founder, Do Kwon, recently said on Twitter that he was close to making an announcement on UST’s recovery. Going forward, any plan towards the old normal would inevitably include LUNA. Burning UST to mint LUNA and vice versa is part of a complex process designed to maintain UST’s value pegged to the dollar. This strategy that involves arbitrage incentives has collapsed due to falling prices.
Withdrawals On Hold
UST’s collapse has prompted “US officials to seek a regulatory framework over the stablecoin corner of the crypto industry. “A stablecoin known as
TerraUSD experienced a run and declined in value.” Treasury Secretary Janet Yellen, the Secretary of the Treasury, said today. “I think that this simply illustrates that
this is a rapidly growing product and there are rapidly growing risks.”
Cryptocurrency struggled to stay afloat in the midst of the ongoing turbulence. The world’s biggest crypto exchange, Binance, decided to halt Luna withdrawals until it could guarantee a stable network and a reduced volume of pending withdrawals.