Luna: Invest Or Avoid?

Should you invest in Luna right now? Well, that's a tricky question. Luna is a cryptocurrency that has seen some significant losses in value over the past few days, weeks and months. In May 2022, Luna's value plunged by more than 98% in 24 hours, falling from a peak of around $120 to below $1. Luna is one of two halves of the Terra blockchain, the other being a stablecoin called Terra, which is pegged to the US dollar. Luna is used to absorb stablecoin price volatility. In May 2022, the stablecoin lost its peg, and its price plummeted. This caused a panic among investors, who sold their Luna, causing its value to drop even further. Since then, Luna has continued to struggle, and in June 2024, it was reported that Luna had lost over 99% of its value in a few days. So, should you invest? Well, that's up to you. Investing in cryptocurrency is always a risk, and it's important to do your research before putting your money into anything. But, as of June 2024, it looks like it might be best to hold off on investing in Luna for now.

Luna's price volatility

Luna's price fluctuations continued, and in May 2022, the cryptocurrency's value plunged by more than 98% in just 24 hours. This sudden meltdown triggered catastrophic losses, causing its market cap to plummet from almost $40 billion to only $500 million. The Luna token has also been associated with the collapse of Terra, a stablecoin that was supposed to be the future of money but instead caused a $60 billion crypto collapse.

The Luna token has experienced significant price fluctuations, making it a risky investment. Its high volatility means that its price movements are less predictable and can swing in any direction. While some investors may see this as an opportunity for profit, others may want to hold off on investing until the cryptocurrency's stability improves.

The future of the Terra blockchain

In May 2022, the Terra blockchain was temporarily halted after the collapse of the stablecoin TerraUSD (UST) and its reserve asset cryptocurrency, Luna. This event wiped out almost $45 billion in market capitalisation within a week.

The collapse was likely triggered by an attack on its liquidity pool and was facilitated by flaws in the underlying blockchain framework. The stablecoin lost its peg to the US dollar, and investors raced to liquidate their positions, causing a further downward spiral.

Terra's founder, Do Kwon, attempted to reassure investors and announced a last-ditch effort to return UST to its $1 peg by increasing the rate at which new Luna is minted per day. However, this move failed to inspire confidence, and investors continued to sell.

The Luna Foundation Guard, which acts as a steward for UST, aimed to fund over $1 billion to resurrect the stablecoin. Despite these efforts, the future of the Terra blockchain remains in doubt.

On January 21, 2024, Terraform Labs, the company behind Terra, filed for bankruptcy in the United States, listing assets and liabilities in the range of $100-$500 million.

While it is possible that Terra may recover and rebuild its ecosystem, the damage to investor confidence has been significant. It remains to be seen if Terra can regain its former status as one of the top blockchain platforms and cryptocurrencies.

The risks of investing in Luna

Luna is the native token of the algorithmic stablecoin platform Terra. Luna's price fluctuates with the market, and it is used to regulate Terra's stablecoin pegs. In other words, Luna is in the centre of the shock absorption process if something goes wrong with the stablecoins on the Terra platform.

There are several risks associated with investing in Luna. Firstly, Luna is subject to the volatility of the cryptocurrency market. Luna's performance may correspond with that of Terra's stablecoins, and investors could be subject to losses if Terra's stablecoins are unable to hold their pegs.

Secondly, Luna is an ERC-20 token, and is therefore subject to the risks associated with the Ethereum network, such as network congestion and potential security vulnerabilities.

Thirdly, there is a regulatory risk. Cryptocurrencies are subject to evolving regulations, and changes in regulations could impact the value and usability of Luna. For example, the U.S. Securities and Exchange Commission (SEC) is currently investigating Terraform over whether it is selling unregistered securities.

Finally, there is a high probability that Luna will eventually be delisted from major exchanges and that the price will drop to $0.00. The Terra (Luna) ecosystem could collapse, and investor confidence may have been irreparably damaged.

The pros of investing in Luna

• Excellent past performance: In 2021, Luna's value increased by over 15,000%.
• Potential for future value gain: The rapid adoption of LUNA and UST tokens indicates a large demand for decentralised stablecoins. As more brands are expected to adopt Terra stablecoins, LUNA token prices could skyrocket.
• Wide adoption and acceptability: There are currently over 100 crypto projects on the Terra Network, and major off-chain brands, particularly in Asia, have expressed interest in using Terra stablecoins or building projects on its network. This increases the use cases for LUNA tokens and stretches demand against a capped supply of 1 billion.
• Growing investor interest: The number of new LUNA wallets and increased daily trade volumes indicate rising investor interest in the LUNA token.
• Rapidly growing network: The Terra network is expanding quickly, onboarding new brands, launching new stablecoins, and collaborating with both on- and off-chain brands. This helps advance LUNA token use cases, increasing demand and driving up the token's price.
• Potential buying opportunity: Some analysts believe that the current low price of LUNA could be a buying opportunity, with the price expected to recover and enter an uptrend.

The best platforms to buy Luna

As of May 2022, it is not recommended to invest in Luna, as the cryptocurrency has crashed and lost more than 98% of its value in a 24-hour period. The Luna Foundation Guard is aiming to fund over $1 billion to resurrect the stablecoin, but it is best to hold off on investing in the beleaguered cryptocurrency for now.

If you still want to buy Luna, here are some of the best platforms to do so:

Binance

Binance is a centralized exchange where you can buy several cryptocurrencies, including Luna. To use the platform, you will need to open an account and verify your identification. You can register via the Binance website or mobile app.

Once registered, you can buy Luna with a debit or credit card, Google Pay, Apple Pay, or via a third-party payment channel.

Trust Wallet

Trust Wallet is a decentralized exchange that supports millions of assets and blockchains. You can trade your Luna to this platform from Binance.

Crypto Exchange Luno

Crypto exchange Luno is another platform where you can buy Luna. However, its founder, Vijay Ayyar, has expressed a lack of confidence in Luna.

Frequently asked questions