5 things you need to know about Terra Luna crypto crash.

By John Doe

In the last few days, a stablecoin called TerraUSD and its sister currency Luna dropped about 80 per cent, rattling the broader crypto market including tokens like Bitcoin and Ethereum.

Luna and Terra stablecoin.

A stablecoin is a cryptocurrency pegged to be like the US dollar or  Euro, meaning that its price remains stable—they are meant to be less  volatile than other cryptocurrencies like Bitcoin or Ethereum, which are  considered more volatile or subject to a sudden rise or fall..

Balancing act

The whole concept of Terra and Luna is based on supply and demand. This  balancing was necessary for investors to book small cuts but stable  profits. However, last week the balancing act between TerraUSD and Luna  broke. People were largely holding Terra because of something called  Anchor Protocol.

Crypto crash

Fear is the biggest factor that drives a bearish sentiment in the crypto  market. As Terra fell, crypto investors panicked and started selling  other coins as well, eventually crashing the crypto market.


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Terra Blockchain halts

The Terra blockchain was halted for over nine hours after Terra’s price fell. The halt meant no new blocks were generated  on the blockchain network. Crypto holders were not able to move their  Terra assets until the blockchain was unfrozen.

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Bitcoin reserves

A report by blockchain firm Elliptic revealed that  at least $3.5 billion in Bitcoin were untraceable after Terra’s price  crashed. According to Bloomberg, Luna Foundation Guard (LFG), a  foundation set up by the Terra blockchain developers bought $3.5 billion  worth of Bitcoin so that they would use it to buy Terra and maintain  the one-to-one peg with the dollar.