The cryptocurrency world has been experiencing a lot of volatility in recent months, especially compared to the green market of gains and bull runs we experienced for most of 2021.
We all know that investing in cryptocurrencies should not be taken lightly. Cryptocurrencies are high-risk speculative assets and you are just as likely to get rich from your investment as you are to completely lose all the money you have invested in them.
Prices fluctuate largely due to the influence of investor and user sentiment, as well as media advertising and even macroeconomic factors.
The fall of LUNA and UST was an eye-opening experience for many and a disruptive factor in the crash that cryptocurrencies as a whole have experienced lately. Therefore, when the news broke that the LUNA ecosystem was being renewed to become LUNA 2.0, critics and investors who lost a large part of their savings harshly criticized this decision by Do Kwon.
This new Terra chain only came with a Luna replacement and abandoned the closely related stablecoin that was one of the main factors of the drop, as the price of UST maintained its peg with the one dollar mark to the detriment of LUNA.
Terra Luna was given a new "life" and is now available on multiple exchanges. That said, it got off to a rocky start as its price plummeted more than 70 percent just hours after its debut, with the majority of the crypto community frowning in disapproval at the entire situation.
Prominent internet figure and cryptocurrency investor Lark Davis shared with his more than 1 million followers on Twitter:
“Zero is planning to buy $luna 2.0, but I will sell any airdrops if I get something on Binance.”
Following the catastrophic failure of UST and the effects it had in the eyes of the crypto community, the credibility of Do Kwon (Developer and CEO of Terraform Labs) was almost completely lost, with only a few believers and a handful of speculators waiting for the recovery of the entire ecosystem.
Not only that, but the reputation it had was also deeply eroded, with controversies and accusations now plaguing Terraform Labs, with local media reporting that Terraform Labs staff were subsequently summoned by South Korean officials and sites like Bitcoin.com reporting that Do Kwon dissolved Terraform Labs moments before the disengagement incident began.
The old Luna coin, now called Luna Classic (LUNC), has surprisingly started to rise in price, with people on social media showing their support and trying to boost the old network while dismissing the new coin.
These extreme moves in volatility certainly caught the attention of speculators looking to make quick profits from the entire Terra Luna situation, while previous holders mourn their losses and try to recover their missing investments.
Fabi Aboualfa, head of research at cryptocurrency brokerage Copper, said:
“This is a pure game of chance like never before seen in the world of cryptocurrencies”
Cryptocurrency analysts generally stay on the bearish side when talking about the new Terra blockchain and the initial volatility we talked about earlier, labeling Luna 2.0 as a very speculative asset and would likely end up gaining or losing value depending on the narrative surrounding it, until the chain and its founder regain the trust of the community and begin to provide fundamental value to the ecosystem that was lost with their latest decisions about where to take the project as a whole.
Not only that, but there were also issues with the Luna 2.0 airdrop, with some investors receiving fewer coins than they should, leading the Terra team to tweet about actively working on a fix, further increasing the disapproval. from its own investor base.
As for previous Luna holders, selling now would basically be adding insult to injury, most of them hold on in the hope of recouping at least a percentage of their initial investments, it would be a matter of time to see how this situation evolves, and if it ends up affecting other stablecoins as investors' fear index soars.
