Some projects were more affected by the bear market than others. LUNA, which is the governance token behind Terra ecosystem, has suffered more pain than any other coin. The token has fallen so much, so fast that Binance —the world’s largest crypto exchange— is turning its back against it.
On May 12, Binance, the world’s largest cryptocurrency exchange, announced the suspension of perpetual contracts on the LUNA/USDT pair after lowering the authorized leverage to 8x.
This decision comes after a series events that saw the price of LUNA plummet to more than 99%. Investors in crypto communities suffered millions of dollars of losses.
Binance Futures will perform an automatic settlement as mentioned above. $LUNA USDT-Margined Contract and then delist the Futures contract at May 12, 2022 3:30pm UTC.https://t.co/774JF0HcqP
— Binance (@binance) May 12, 2022
This was however not enough. LUNA fell without stopping. Binance, just hours after its previous announcement, announced it would be removing cross- and isolated margin pairs, spot trade pairs BUSD margined perpetual LUNA contracts. It effectively said good bye to the hyped cryptocurrency.
This move was not made by chance. Binance had already reduced the maximum leverage of LUNA futures to eight times on May 11th, after a large wave of liquidations from overleveraged positions. However, anyone who tried to save a long-leveraged LUNA futures position on that day would have been unsuccessful as the LUNA token trades at less than $0.005.
Yesterday, the CEO of Binance, Changpeng Zhao warned via his official Twitter account that it was necessary to respect the market when trading it since it is a “new market” with new stablecoins, that “When they are hot, they are all the rage. [But] When they drop, it can be a vicious circle”. This message was in reference to everything that was happening with UST.
Many people asked me about today’s markets. The market must be respected, but we should also exercise caution. It moves in cycles. And especially the fact that it doesn’t always make sense. 1/4
— CZ 🔶 Binance (@cz_binance) May 11, 2022
Several people lose their jobs as a result of the collapse in LUNA prices
On May 11, LUNA’s price dropped from $40 down to below $1. It was such a case that Reddit members even reported suicides. losing their savingsand mortgages on houses due to the crash.
In less than a week, anyone with $100,000 invested in Terra’s project went down to just under $500 in total assets. And this is not counting those who froze their money in the “safe” UST stablecoin. Even though UST was designed to be worth 1$, the token crashed from 1$ to $0.2 —which is catastrophic for any investor, conservative or aggressive.
My 2.8 Million Dollars is actually worth $1000
HAHAHAHAHAAHAHAHAHAHAHAHAHAHAHHAHAHAHAHAHAHAHAHA. Yeah I’m packing this in 😂😂😂😂 pic.twitter.com/qeiVN5yG2w
— KSICRYPTO (@ksicrypto) May 12, 2022
Terra (LUNA), the Terra Team, has announced that they are currently implementing specific measures to bring it back to life. However, so far the actions have not had any impact on the wider market sentiment.
Validators are applying a patch that disables further delegations. They will coordinate to restart your network within a matter of minutes. https://t.co/4gakxPLpLm
— Terra (UST) 🌍 Powered by LUNA 🌕 (@terra_money) May 12, 2022
The team behind Terra is now considering all proposals to resuscitate LUNA and UST —even ones that would have been unthinkable before, like altering the token’s algorithm. Today the Terra development team announced that they had stopped the blockchain to “avoid governance attacks after a severe inflation of $LUNA.”
Therefore, although Terra founder Do Kwon said on May 11 that they are working to bring the project back, other exchanges may follow in Binance’s footsteps and end up delisting LUNA/USDT trading until further notice.