Terra crypto woes aren’t over yet.
Bargain hunters take note.
The now decidedly un-stable coin, TerraUSD (CRYPTO: UST), plunged another 31% over the past 24 hours to 9 US cents. This comes amid a wider sell-off in cryptos following the biggest drop in US markets in almost two years yesterday (overnight Aussie time).
What’s happening with Terra’s cryptos?
We first penned an article on Terra’s plunge last Thursday. At that time the algorithmic stablecoin intended to be pegged to the US dollar had tanked some 70% and was trading for 30 US cents.
With the latest fall, Terra’s stablecoin is now down 90% since this time last week.
Investors holding Terra (CRYPTO: LUNA) are out far more.
LUNA – a top 10 crypto by market cap before its demise – is the token that was intended to help UST maintain its dollar peg. The idea being that investors could swap one UST for US$1 worth of LUNA at any time.
That worked well. Until it didn’t.
It was only last month, on 5 April, that Luna hit record-highs of US$119.18, according to data from CoinMarketCap.
Last Thursday it plunged to US$1.05.
Today, Terra’s LUNA crypto is trading for 0.01462 US cents. That’s down another 22% over the past 24 hours and down essentially 100% from last month’s all-time highs.
While there’s no single factor that’s led to the collapse of Terra’s cryptos, a large driver appears to be a lack of confidence. Once investors lost confidence in the US dollar peg and began to sell, the token continued to spiral lower.
Beware the hype cycle
Both the Terra crypto offerings were once ranked among the top-10 by market valuation.
But Brent Donnelly, president of Spectra Markets, has some words of caution for investors buying into the hype that often surrounds new and fast-rising altcoins.
According to Donnelly (quoted by Bloomberg):
Every altcoin, regardless of its true promise, has an amazing hype, narrative, and origin story when it’s running higher. Every coin has a marketing department, religious adherents, and a cool story. But very few remain relevant once the primary hype cycle wanes.
Donnelly adds that only four cryptos have shown any staying power in terms of maintaining their market valuations.
“Bitcoin, Ripple, Doge, and Litecoin are the only cryptocurrencies that were in the top 15 by market cap in both 2015 and now,” he said.
“Coins cycle in and out. That’s why all the altcoin charts look like mountains. Altcoins are lotto tickets that only pay off if you take profit before they collapse.”
The post Un-stable coin? Terra crypto woes continue with another 31% fall appeared first on The Motley Fool Australia.
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