The relaunch of Terra (LUNA) has worked technologically – but the markets are demonstrating mistrust. LUNA 2.0 plummeted by 70 percent in the first hours of trading and has been stagnating ever since.
Hopes for a successful LUNA 2.0 from the start have been dashed. Terra (LUNA) was able to announce the successful genesis of the blockchain on Saturday morning. But when trading started a little later on the first crypto exchanges, the trend was clear after just one hour. At the start of trading, prices of around 17 US dollars were still forming for LUNA 2.0, but then the price curve dropped steeply to below 6 US dollars, where it has remained ever since. The approximately 70 percent drop for Terra can be interpreted as a slap in the face by investors for the already controversial attempt of a comeback of LUNA.
Terra had been on a rapid slide with the algorithm-linked stablecoin UST from May 7, when UST lost its 1:1 peg to the U.S. dollar. When the momentum led to a huge crash with losses of more than $40 billion, Terra founder Do Kwon proposed to try a reboot without UST. This has now been implemented, but initially only led to a massive sell-off after the associated airdrop of LUNA 2.0. At least no shockwaves were now felt on the overall crypto market. The collapse of the old Terra with UST had also radiated to Bitcoin (BTC) and all major altcoins, provoking double-digit price losses there.
Terra Classic and UST still at junk level
Parts of the community had opposed the artificial revival of Terra and announced that they would continue to hold on to the old LUNA and UST. These tokens are now listed under the abbreviations Terra Classic (LUNC) and TerraClassicUSD (USTC). They managed to post a small gain over the weekend, but with prices of less than 1 cent, they remain a reminder of the 99 percent total loss that the Terra ecosystem suffered in the second week of May.
Research and speculation continue on the reasons for how the downward spiral was triggered in detail. Nansen analysts, according to their report, are certain that seven major investors had independently begun pulling UST, bringing the algorithm to its knees. Other voices believe that there was a deliberate fraud scheme behind Terra and UST. UST was advertised with almost 20 percent annual interest, and parallel to the rise of the stablecoin, LUNA had also recorded one all-time high after another and reached prices of over 100 US dollars.
Conclusion: LUNA 2.0’s future prospects shrunk
In the camp of Terra fans, there may still be representatives who forecast a bright future for LUNA 2.0. They argue that successful DApps should be available sooner with the new Terra. The sober evaluation of the markets for LUNA 2.0, however, speaks a different language and clearly reflects that trust in Terra and Do Kwon has been destroyed.