The biggest explosion in the cryptocurrency world was a 94% drop
Back in May 2022, it was a moment that countless people will never forget. The cryptocurrency industry suffered the most terrible attack in history. Luna, the once-popular digital currency, almost went to zero in a tragic crash, bringing disaster to countless investors.
At that time, even giants like Binance decided to stop Luna futures trading and delisted Luna’s B-standard contract. This news was like a bombshell, and it exploded on Twitter. People left comments under the tweets of Terra founder Do Kwon, expressing their horror and despair.
Why do we have to endure such pain? I just put my money in stablecoins and did nothing, but I lost everything! "Someone cried like this. Another said: "I have nothing now. Luna made me lose 94%
However, all this is not accidental. In fact, this is a market siege with traces to follow, and Terra is the prey targeted by capital. In the Southeast Asian financial crisis in 1997, financial killer Soros and his super-rich friends, relying on their strong financial strength, made waves in the market. They sold a large amount of Thai baht, causing the Thai central bank's foreign exchange reserves to be quickly exhausted, and eventually forced the Thai baht to implement a floating exchange rate system, pushing Southeast Asian countries into the abyss of financial crisis.
The current Luna tragedy is exactly the same as it was back then. UST, the algorithmic stablecoin of the Terra ecosystem, suffered a serious decoupling incident due to being surrounded by capital. The original 1:1 anchoring rule of the US dollar was broken, and the market fell into panic.
Terra uses a dual currency mechanism of luna and UST, and attracts users to deposit UST by promoting Anchor Protocol, giving them up to 20% interest. This attractive return has attracted investors, and the ecological market value has expanded rapidly. However, doubts have also followed, and many people believe that this is a Ponzi scheme.
The Fed’s interest rate hike became the last straw that broke the camel’s back. Since May, the Nasdaq index has continued to decline, and market sentiment has been extremely pessimistic. The stock market has plummeted, and the price of Bitcoin has also fallen sharply for several consecutive days. Panic spread throughout the market, and Terra Ecosystem Fund lfg made a fatal decision at this time.
In order to form a stronger liquidity pool, the lfg Luna Foundation announced that it would adjust the No. 3 liquidity pool on May 8. This news caused speculation and anxiety in the market, and also provided an excellent opportunity for attackers.
On the evening of May 8, the giants in the cryptocurrency circle began their hunting operation. They sold a large amount of UST, causing its price to plummet and triggering panic selling in the market. UST holders sold their tokens one after another, and the price of UST fell further, falling into a death spiral.
Market rumors said that some institutions began to trade behind the scenes, trying to save the market by entering at a low price. However, this rumor was not confirmed and the market reaction was flat.
Terra founder Do Kwon's response to the crisis has sparked widespread controversy. His attitude on Twitter was tough and even arrogant. He denied market rumors and said he would not use Bitcoin reserves to save the market. This attitude made investors more desperate and the price of UST continued to fall.
As the price of UST fell below $0.95, lfg was forced to start liquidating their bitcoins. They announced that they would lend out about $700 million in bitcoin savings to save the stability of UST. But this move seemed to come too late, and the panic in the market could no longer be curbed.
The price of Luna also plummeted to zero, and the wealth of countless investors was wiped out. This incident made people deeply aware of the risks and cruelty of the cryptocurrency circle.
In this disaster, some people chose to commit suicide, some lost their families, and more people fell into despair and pain. This is one of the darkest moments in the history of the cryptocurrency circle, and it is also a pain that investors will never forget.
However, this incident also made people begin to reflect on the regulation and risk control of the cryptocurrency market. How to prevent similar tragedies from happening again has become a difficult problem facing regulators and investors.
The future of the cryptocurrency world is full of uncertainty, but we must not forget this lesson. On the road to wealth, we must remain calm and rational, and not be swayed by greed and fear. Only in this way can we survive and develop in this market full of risks and opportunities.
