The Terra blockchain cryptocurrency Luna is at the center of a gigantic crash.
The future may be a place too far away for some crypto-currency investors. The collapse of many digital currencies in recent days is casting doubt on many of those who predicted a bright future in which crypto-currencies would replace traditional money and break the monopoly of central banks. The near-disappearance of Luna, the star of one of the industry's biggest fiascos. Its value went from over $20 billion to nearly zero in a matter of days and took its toll on investors. It also spread to the major cryptocurrencies including bitcoin which lost 17% in just five days, and Ethereum, the second-largest cryptocurrency, which lost 23%.
In this video, we will explain why Luna disappeared, what caused the crash, and much more information about this event.
So, watch this video all the way through because, we are also going to reveal to you 2 altcoins in which you should invest in the middle of the crypto crash, in order to make a massive profit.
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Now without further ado, let's get straight to the point
Just a few days ago on Twitter, the validators behind the Terra blockchain decided to shut down the network, for the second time in less than 24 hours. At the time of recording this video, it is still not possible to buy or sell tokens of the Terra (LUNA) cryptocurrency on the main exchange platforms.
Binance, on the other hand, has simply withdrawn it, so as not to harm its users. The asset lost more than 99% of its value in a few hours. For those who hold Luna, they will have to wait. Until the network is reactivated, no transactions are possible.
Overnight from the 13th to the 14th, the plunge strengthened and the Luna crypto fell below $0.0001 to below $0.00001. The more than $40 billion capitalizations of a few days ago evaporated to below $270 million. Some people who held several thousand dollars worth of Luna are currently left with just a few cents on their wallets.
The cryptocurrency, once among the 10 largest in the world, is now relayed in 222nd position. The Terra blockchain, which was the second-largest in decentralized finance (DeFi), is shut down. An unprecedented event that we have explained in several other videos on the channel.
But then, why did the Luna crypto disappear?
Well, while the validators decided to shut down the Terra blockchain, exchange transactions are no longer available. According to explanations from members of the Luna Foundation, they have "stopped the network to propose a plan to rebuild it", inviting the community to be patient with "more information to come".
It's hard to know when the patches will be deployed and when the blockchain will be able to resume service. In the meantime, the price continues to fall to less than $0.00004123.
Tied directly to the UST stablecoin, which has de-indexed from the dollar price, it's hard for Luna to climb back up. To increase its chances of a comeback would require a large-scale recapitalization, probably larger than Bitcoin. This is impossible at the moment. Not to mention a revival of community confidence.
Now, why the drop?
To understand the fall of Luna, you have to understand the fall of UST. As we explained in our previous videos about its fall, it is an algorithmic stablecoin, which is not based on a reserve of the fiat currency on which it is traded, laid out in a bank. TerraUSD relies on an arbitrage mechanism, whose operation is based on the Luna cryptocurrency of the same Terra blockchain. To put it simply: when the price of a UST falls below one dollar, the mechanism burns one UST for one Luna dollar. This is how the price of the UST is maintained at $1. But, very recently, a hack occurred on the Terra blockchain that caused the price of UST to drop exponentially.
As a result, the price of Luna slipped into a downward pressure and the sudden arrival of extraordinary volume made the mechanism lose its footing. The cryptocurrency entered a spiral where investors withdrew in massive numbers. 40 billion dollars evaporated and the price continued to fall without any support or psychological threshold. On the other hand, investors also withdrew from the UST, which had lost what characterized it: the stability of its price.
What caused the crash was a very large-scale affair. We will try to come back to this on Presse-citron as soon as possible. But one thing is certain: with thousands of people in debt around the world, some of them have certainly become richer by the billions. Do Kwon, the developer behind the Terra blockchain said he wanted to "kill" competing for stablecoins like DAI. But currently, he could be the subject of an investigation.
Now people are asking if this is the beginning of the end for crypto?
The answer is NO!
In total, crypto-currencies are worth $1.2 trillion, according to CoinMarketCap, so despite the setback, they still have a capitalization equivalent to online retail giant Amazon. Bitcoin trades for about $30,000, its lowest level since late 2020. So, the recent crash hurts its credibility but doesn't signal the end. In fact, bitcoin fell by 80 percent in 2018, a higher percentage than today. Later, the crypto-currency was able to fully recover and hit new highs. Its advocates cling to these precedents amidst the current trading panic, even though history doesn't have to repeat itself.
In times of trouble, one of the most repeated battle cries among small investors betting on crypto-currencies is to hold on, i.e., to weather the storm without selling. Otherwise, they will lose everything and probably give up.
The ups and downs of bitcoin and other cryptocurrencies are not new. Since their birth more than a decade ago, the difficulty of determining their true value has caused them to swing wildly. At first, the sharp revaluations helped support the legend that it was a relatively simple way to multiply your savings. But past benefits do not guarantee future benefits. There are unconfirmed expectations about their future use and some doses of FOMO among small investors.
But, what about those who lost money?
The thousands of small investors who have entrusted their money to Luna or TerraUST have no way to recover what they lost. Crypto-currencies are now high-risk assets moving in something akin to a financial Wild West. And messages from those who have seen their savings built up over months or years evaporate in a matter of days are flooding online forums like Twitter or Reddit. The case could indeed prompt the authorities to take a greater interest in regulating its operation.
Now, what are the corners to invest in during crypto's fall?
At a time when it seems difficult to bet on a recovery of LUNA, let's see which assets it seems reasonable to turn to.
#1: ApeCoin (APE)
We have ApeCoin (APE), still listed on all exchanges, which rose 57% during this week. This currency is recovering from the crypto market crash faster than most altcoins.
#2: DeFi Coin (DEFC)
Then, we have DeFi Coin (DEFC), which also appears to be an interesting alternative. Indeed, it was not affected by the recent crypto-currency crash, as it was already undervalued. DEFC has risen nearly 600% since May 5, the approximate start of the Bitcoin crash. Its value then went from $0.085 to $0.56. It is now stabilizing at around $0.35.
DEFC has already retreated 98.75% from its previous all-time high of $4 in July 2021. Almost a year later, this may explain the lack of selling pressure. This event was due to delays on its roadmap and the token's price rose in response to these updates.
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