The price of Shiba Inu (SHIB) has recently surged for several main reasons. The first is the increased activity of “whales” (large investors), who have been buying huge amounts of the coin, which has increased market interest and investor confidence in its future. There is also speculation about the possibility of launching an ETF for Shiba Inu, which has sparked additional enthusiasm among investors.

In addition, the SHIB trading community has seen increased participation with a large number of transactions and coin burns to reduce supply, which supports price stability. Technical analysis has also indicated an upward movement, as the coin has surpassed important resistance levels, which reinforces expectations for further gains in the future.

Future projects such as the Shibarium platform and the Shiba Eternity web 3 version have also boosted confidence, stimulating the market and supporting the price.

The story of Luna is related to the Terra project, a cryptocurrency project known for its innovative technologies but faced significant events that greatly affected the market.

Background:

The Terra project was launched in 2018 by Terraform Labs led by Do Kwon and Daniel Shin. The main goal of the project was to provide a stable currency based on the blockchain system to support fast and simple transfers between traditional currencies and cryptocurrencies. The project introduced a stable currency called TerraUSD (UST) that was supposed to be supported by the Luna ecosystem.

Mechanism of action:

The system used the Luna coin to maintain the stability of the UST coin. When the price of UST exceeded one dollar, the Luna coin was “burned” (destroyed) to create more UST and vice versa if the price decreased. This mechanism was intended to maintain the balance in the market between supply and demand.

Collapse:

In May 2022, the project suffered a major collapse after the UST coin lost its stability and its price pegged to the US dollar. Its price dropped below one dollar, causing panic in the market. This crisis was accompanied by a sharp decline in the value of Luna, as its price fell from over $ 100 to fractions of a cent in a few days.

Possible reasons for the collapse:

The balancing mechanism between UST and Luna failed to cope with the huge pressures in the market.

Massive sell-offs by investors exacerbated the crisis.

Lack of liquidity and transparency in reserve management.

After the crash:

A new project was launched under the name Terra 2.0, where Luna continued to exist but on a new chain. The old coin was called Luna Classic (LUNC).

While the Terra team tried to rebuild the project, the reputation was greatly shaken, and the Terra project became a warning about the risks of unstable systems in the cryptocurrency market.

The impact of the crash:

The crash caused billions of dollars in losses for investors.

The project was met with severe criticism from the cryptocurrency community, and investigations were opened in several countries into the way the project was managed.

The story of Luna is one of the biggest examples of the risks associated with cryptocurrencies and the need to be careful when investing.