Breaking news: LUNA slumps by nearly 85% in a day

The movement has made Luna  fall out of crypto’s first top coins to the 15th at the time of writing, sitting below Litecoin and Bitcoin Cash on CoinMarketCap.

Image by coinmarketcap.com

Do Kwon, co-founder of Terraform, has tweeted that he was "close to announcing a recovery plan for $UST."  Any recovery plan is expected to affect LUNA price as well. However, large cryptocurrency exchanges like Binance, have announced stopping withdrawals of LUNA temporarily until it "[deemed] the network to be stable and the volume of pending withdrawals has reduced."

One of the key reasons behind the recent fall-off is the Wormhole hack which caused UST to lose its peg, causing the value of LUNA to drop temporarily. It is worth mentioning that prior to this crash, UST was the third most popular stablecoin (only behind Tether and USD Coin) by market cap. Another reason for the notion is upgrades like Columbus-5 which has made the LUNA supply severely deflationary, causing UST to become volatile and as a result LUNA's value plummeted.

Terra's dollar stablecoin, UST,   lost its peg to below $0.70 yesterday and has been struggling to get back to parity with the dollar. It began drifting off of its dollar peg on Sunday and is now the 20th largest crypto by market cap, trading at just $0.8. 

Having in mind all the ups and downs and risks of financial stability, investors no longer have faith in Terra. They prefer trading their stablecoins in, only to dump their LUNA on the market shortly after for a profit or simply invest on more stable options like Bitcoin and Ethereum which are down by just 18% and 17% this week respectively.