LUNA price forecast: can the token recover after its collapse?
- In the last 24 hours, Terra (LUNA) decreased in value by 90%.
- Its trading volume also saw a decrease of 40%.
- Terra's bet on Bitcoin being a reserve currency for its stablecoin is being put to the test.
Terra LUNA/USD is a decentralized finance blockchain that aims to build a powerful global payments network.
It was specifically developed to disrupt the traditional banking system through the mass adoption of stablecoin cryptocurrencies alongside decentralized finance (DeFi) infrastructure.
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One of the main stablecoins that has gathered a lot of attention in its broader ecosystem is TerraUSD (UST).
LUNA collapsed in Value
Things are taking a turn from bad, to worse, within the Terra ecosystem due to the fact that the LUNA price has collapsed.
Specifically, as of May 11, 2022, in the span of the last 24 hours, its value decreased by 90%, while its trading volume dipped by 40%.
On May 11, we covered where you can buy LUNA after its dip in order for investors to take advantage of it.
Its algorithmic stablecoin, TerraUSD (UST), seen by many as its flagship product across the ecosystem, has also decreased by 57% in the last 24 hours, with its value at $0.44 as of May 11, 2022.
This stablecoin was initially created to maintain its value pegged to that of the USD, which means that it should be at $1 optimally.
However, the founder of Terra (LUNA), Do Know, made an announcement on Twitter on May 10, 2022, about a recovery plan for UST, which should bring back the value of the LUNA token as well.
All of this can be traced back to Bitcoin BTC/USD, as TerraUSD (UST) uses the token as a reserve to defend its dollar peg.
The result of this is the fact that Binance announced that they had discontinued UST and LUNA withdrawals for six hours.
This was due to a “high volume of pending withdrawal transactions,” adding that “this is caused by network slowness and congestion.”
Should you buy Terra (LUNA)?
On May 11, 2022, Terra (LUNA) had a value of $2.09.
In order for us to see what this value point indicates for the future value of the LUNA cryptocurrency, we will be going over its all-time high point of value, as well as the performance the token showcased throughout the previous month.
The token’s all-time high was on April 5, 2022, when it reached $119.18 in value. Here we can see that, at its ATH, the token was $117.09 higher in value, or by 5,602%.
Terra (LUNA) had its highest point of value on April 5 at $119.1. Its lowest value point was on April 18, when it decreased to $76.23. This marked a decrease in value of $42.87 or 36%.
When we take a look at all of this and put it into perspective, from April 18, which was its previous lowest point, to May 11, the token decreased by $74.14 or by 97%.
This means that the token has fully collapsed in value. However, if the token manages to increase over the $10 price barrier by the end of May 2022, it can increase in value to $50 again by the end of 2022.
This might make it the next coin to buy for investors who look at a project’s long-term potential. But a lot has to go right in order for this to happen.