The year 2021 was huge in terms of cryptocurrencies. Not only were there more of them than ever, but their values hit record highs. With Bitcoin, the original crypto, values exceeding $69,000 were reached. Ethereum also broke records and that led to a sense of excitement within the crypto community.
One of the newer cryptos is Luna and this is one that saw some pretty impressive growth in 2021. The coin showed so much promise that YouTuber and crypto investor, KSI, bought $2.96 million of them. What followed was completely unexpected. As the markets turned, Luna crashed and almost $3 million worth of the coin became worthless.
Many who invested in Luna were left regretting that decision, and some detractors of crypto have said that this is a cautionary tale. In many cases, the unregulated nature of crypto makes investing a gamble, similar to betting at the best online casinos.
What now for Luna? Is there a potential comeback on the arisen, or has this crypto been laid to rest? Let’s take a look.
What is Luna?
Luna coin came from the South Korean company, Terraform Labs. It was officially launched on the crypto exchanges in July 2019. Luna was supposed to be different to other cryptocurrencies out there. It was designed to avoid the fluctuations that had been seen with other cryptocurrencies by being a dual-token system. This meant that there was also a stablecoin called terraUSD.
Luna was used to power the stablecoin and holders were able to stake it in order to provide liquidity as well as generate rewards. A white paper entitled “Terra Money: Stability and Adoption” had filled investors with hope that this was the crypto that would bring an end to extreme volatility seen with other coins.
A look at the history of Luna’s value
At its launch, Luna was worth $1.31, however, the next 18 months saw this price continually falling. By March 2020, it had hit a record low with a value of just $0.12. A boost was just around the corner though as Luna announced that it was to be listed on the exchange platform, Binance. This saw values increase to $0.56 before experiencing yet another dip.
It was at the beginning of 2021 that Luna started to behave in a way not seen before. By February it crossed the $6 mark and by August it was $34.96. Even the big crypto crash in September had a minimal effect as the coin fell to $27.79.
Upgrade to Terra blockchain
On 30th September 2021, the price of Luna began to rise again. This followed the Terra blockchain’s Columbus-5 mainnet upgrade. Part of the upgrade meant that Luna was now perfectly destroyed when burned rather than being placed into a community pool.
The upgrade led to Luna hitting a new high just below the $50 mark. This trend continued with it reaching $54.77 on 8th November and then breaking the $100 barrier on 27th December. While 2021 has certainly been an exciting year for Luna, there was more to come in 2022.
On 22nd February, $1 billion was raised by the Luna Foundation Guard to create a UST reserve. The denomination of this reserve was Bitcoin. Investors saw this reserve as a way to reduce volatility and this led to bullish actions.
By 9th March, Luna was at $104.58. Come 5th April an all-time high of $119.18 was reached just as Binance allowed staking with the TerraUSD stablecoin. What happened next was completely unexpected.
Investors had pumped millions into Luna and confidence was high. However, in May TerraUSD dropped below its $1 peg and went as low as $0.05. This was o the back of Luna crashing. It fell out of the top 10 cryptos and soon found itself outside the top 200.
Luna’s crash saw people losing their life savings. What had seemed a safe bet had led to nothing short of a disaster and rocked confidence in crypto as a whole. If this could happen to what was supposed to be the safest crypto ever, what security could there ever be with the others?
Turning things around
Following the crash, Luna didn’t just go away. It launched a new blockchain later in May with the hope of rebuilding. The problem is that the name will forever be associated with the biggest losses ever seen in crypto and restating confidence in investors is going to be a nigh-on impossible task.
Binance itself had invested significant sums into Luna. In fact, this investment topped $3 million and reached a value of $1.6 billion in April 2022. What happened next saw that value plummet to a mere $3,000. Many like Binance are unlikely to be forgiving, or trusting, in the future.
How will Luna perform for the rest of 2022?
For anyone left holding Luna, the future doesn’t look overly bright. Many predict that the price will just continue on its downward spiral and no one should be looking at making any kind of investment in it.
The average price prediction for 2022 is $0.00012. It is likely to take three years for it to reach the heights of $0.00018 with 2031 seeing it reach a high of $0.0004.
Should you invest in Luna?
With Luna at a record low, there may be some that are tempted to buy and hold for the long term. Any decision here must be based on your attitude to risk. There are some who think the price predictions are a little out of touch and that Luna all recover. However, even those with this thought don’t see the coin being worth more than $0.01 in the next decade.
Luna has perhaps been a lesson to all. While many have made their fortunes through crypto, there is still extra volatility in the markets and, as long as this exists, there are going to be huge risks for those who choose to invest.