LUNA and Terra UST have been destabilized. Experts suggest that this is the result of a FUD attack.
Over the past seven days, Terra (LUNA) has fallen in price by about 30%, according to CoinMarketCap. At the same time, Terra UST, an algorithmic stablecoin associated with the project, was “detached” from the value of the US dollar. As of May 9 at 16:00 (GMT+3), UST is trading at $0.95.
Experts note the signs of the FUD attack in this situation, that is, a deliberate manipulation to disseminate the uncertainty among market players about the reliability of assets, cause doubts about their reliability and provoke mass sales against the background of the fear.
The situation was affected by several factors at once:
- The sale of 285 million UST on Curve Finance and Binance.
- The withdrawal of 2.2 billion UST from the Anchor protocol.
- The lack of a prompt reaction from the Luna Foundation Guard (LFG).
Notably, the LFG bought 37,863 BTC the day before on the OTC market for a total of ~$1.5 billion, thereby increasing its portfolio to 80,394 BTC. These funds should ensure the stability of the Terra UST stablecoin, that is, the loss of the peg to the US dollar should have led to the liquidation of some of the fund’s assets to equalize the rate. But the sale of the LFG assets in such a situation is in manual mode, and the corresponding reaction did not follow. Thus, the first two factors put pressure on the value of UST. At the same time, the lack of action by the LFG affected the value of LUNA, which should ensure the stability of UST.
Earlier, Terraform Labs head Do Kwon bet that the average daily price of LUNA as of March 14, 2023, according to Coingecko service, will be $88 or more. At the time of writing, the asset is trading at around $60.
UPD: After LUNA quotes fell by almost 100%, we took a closer look at the situation that triggered the collapse of Terraform Labs projects and what is happening in the context.
