The Luna Crash and the Smudge of the Crypto Industry

 The collapse of Luna and UST cryptocurrencies not only made investors lose everything, but also affected the community's confidence in cryptocurrencies.

The crypto community is going through a tumultuous time when the Luna token and Terra's stablecoin UST suddenly plummeted. Economic Times called the project's demise a "massacre" for investors as the token's price dropped by 99.6%. Luna's price from a peak of $86 on May 4 fell vertically down to $0.005 as of the morning of May 13.

While players are bewildered by almost losing everything, many experts point to a serious crisis, when users lose confidence and regulators can squeeze the operation of stablecoins, putting the entire market at risk. .

"Terra will create a 'stain' that makes the community have an ugly view of cryptocurrencies. From there, a wall of separation will be erected, making many people not want to enter the market," said Arthur Breitman, founder. project Tezos (XTZ), wrote on his personal Twitter.

According to Coin Telegraph, the white hat hacker group Tree of Alpha called this "one of the biggest death spirals in the history of the cryptocurrency market". The team believes that the collapse of Luna is no different from Bitcoinnect's Ponzi scheme - a $2.4 billion scam that has caused the cryptocurrency market to be infamous for a long time. In 2016, BitConnect built a "textbook" Ponzi scheme, with the method of taking investors' money later and paying investors first. But by 2018, BCC lost 92% of its value, causing participants to almost lose all their money. This project also attracted many Vietnamese investors before closing.

Billionaire Mark Cuban also agrees that the crypto market is experiencing unprecedented moments in history. "After a vibrant period of exciting applications from NFT, DeFi to GamFi, the market entered a 'nightmare'. What is happening is similar to the crisis of the Web 2.0 era in the early 2000s. ", he said.

Although Luna's demise shocked the crypto world, there were also many opinions that things were actually not as bad as the community envisioned. Sam Bankman-Fried, founder and CEO of exchange FTX, said that while Terra's case is serious, it's not so big that it can drag the entire stablecoin business into a recession. "The fall in UST's price is predictable for industry insiders. I don't want to judge this as good or bad, but it's a prime example of how important it is to have detailed information. details," said the cryptocurrency billionaire.

Meanwhile, Emin Gun Sirer, co-founder and CEO of Ava Labs, said that in the past, many incidents similar to Terra have appeared, so users do not need to worry too much. He even expressed an optimistic view: "We all like drama. Many people accept the trade-off to make a little profit when the market is risky. The real fortune in cryptocurrencies lies simply in in long-term transactions.

Despite the ongoing controversy, both Terra's UST and Luna coins are consistently bottoming out. Data from Coin Marketcap until the morning of May 13, the price of one UST traded around $0.23, down 70.6% within 24 hours, the market capitalization was nearly $2.7 billion, ranked 29th in the market. school.

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