The dreams broken by Luna, the cryptocurrency that crashed in three days: ‘It seemed like a safe bet’ – EL PAÍS in English

The dreams broken by Luna, the cryptocurrency that crashed in three days: ‘It seemed like a safe bet’ – EL PAÍS in English

Blockchain Crypto Market Technology
May 23, 2022 by Coinvasity
26
Until just a few days ago, D.S. thought that investing in cryptocurrencies was one of the best decisions of his life. He had €80,000 ($84,300) worth in Luna – double the €40,000 ($42,200) he had invested almost a year ago. Today, when he opens the application to see how much of that he has left,
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Until just a few days ago, D.S. thought that investing in cryptocurrencies was one of the best decisions of his life. He had €80,000 ($84,300) worth in Luna – double the €40,000 ($42,200) he had invested almost a year ago. Today, when he opens the application to see how much of that he has left, the vision is bleak: €4 ($4.22). “It seemed like one of the safest bets. Even when bitcoin was losing value, luna was hitting all-time highs. They were going to launch lots of projects and they were backed by investment funds, ”says the 32-year-old Spaniard, who has seen most of his savings evaporate in just three days after the collapse of the digital currency.
His story is repeated across the world. Luna was created by Terraform Labs, which is owned by 30-year-old Do Kwon from South Korea. Up until just a few days ago, it was considered one of the sector’s biggest success stories. Last week, before the collapse, one young Luna investor described Kwon as a “visionary, the Elon Musk of the future.” Tens of thousands of small-time investors around the world threw their money into Luna, which was once valued at $18 billion. But opinions about Kwon have changed now as investors come to terms with their losses. On forums such as Reddit, once-enthusiastic backers commiserate over their losses, with some users expressing suicidal thoughts. And now Kwon fears for his safety. After the Luna crash, a stranger broke into the premises of Kwon’s apartment rang the doorbell, and asked his spouse if her husband was at home before running away from the premises. Kwon’s wife has reportedly sought police protection.
It is a disturbing end to a period of untrammeled euphoria. When the value of Luna went from $4 in February 2021 to $60 in the same month of 2022 – multiplying fifteen-fold in just one year – questions were not raised about the sudden spike, instead, it was expected to rise even more. Few suspected that everything was about to fall apart. “I invested because it was one of the top cryptocurrencies. It was among the top 10 by market capitalization. I was sold on the project and the profitability of its stablecoin was incredible,” explains another young man from Madrid, under the age of 30, who lost €5,000 ($5,300).
The stablecoin he is referring to is TerraUSD or UST. Investors who deposited UST in “Anchor Protocol,” a lending and borrowing protocol built by Terraform Labs, were offered a stable yield rate of up to 19.%. In a context, in which few banks give more than 0% due to low-interest rates, this anomaly was not questioned by the winning investors, who were blinded by the power of a new technology that was promising to make them rich. But UST lost its peg to the US dollar, and this is what sent Luna, its sister currency, into a health spiral. Luna lost more than 90% of its value in three days, triggering one of the biggest shocks in the crypto sector’s short history. But big losses do not always act as a deterrent. “I still think that it can turn around and I have not sold anything. On the contrary, I have bought more. When a guy goes out partying and spends €50 [$53] on drinks on something that affects his health, no one asks him if he thinks it’s wrong to throw that money away. At least this doesn’t harm my body,” says the 30-year-old from Madrid.
Other Luna investors have completely lost hope in a comeback, which experts have also ruled out. One investor, a 41-year-old doctor, who like the rest of those affected by the crash only speaks on the condition of anonymity, says that from now on he will limit his investment in cryptocurrencies to the two largest ones: bitcoin and Ethereum. “I’ve lost two months of salary, about €8,000 [$8,500], so it hasn’t changed anything for me. My investments are diversified and the percentage I have in cryptocurrencies is very low, but I think it is a blow to the future crypto adoption that is so much talked about. At the moment I am going to stay on the sidelines, and I am only going to reinvest the profits,” he says in a message on Telegram, which has several groups of Luna investors.
Yuvraj Sharma from India is one of the few people who agreed to give their full name. There is little risk that his friends and family will read the news, and the $200 he lost in Luna has also not upended his life. But for the 19-year-old business student from Calcutta, it is more money than it might seem. “It is a lot for me because it has cost me a lot of effort to get it. It’s two months’ worth of wages. I still hope that something will be done to address this devastating crash and that I will be able to come out with at least what I invested,” he says. The chances of that happening are close to nil. The price of Luna today is $0.0002.
Sharma’s case highlights a growing trend: more and more young people are investing in cryptocurrencies, without any safety net. The fact that they do not large sums to invest is the only thing that is preventing them from losing bigger amounts of money in a sector that they do not completely understand. The question now is whether these young investors will persevere, and invest more when they start earning more, or if this is just a passing trend that will fade over time.
Edited by M.K.
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