The past two weeks have seen an extreme bear market in the history of crypto. Terra (LUNA) has once ranked among the 10 most valuable cryptocurrencies in the market and had an all-time high at the price of $119.5. By May 11, however, the price of the asset had lost about 99% of its value and dropped from $75 to $0.000005 in a few days.
What followed was that the YFII token price on major exchanges suddenly dropped sharply at about 04:15 a.m (GMT) on May 25, falling from $1,221 to as low as $320 in just 15 minutes, equivalent to nearly 74% of the value.
What Contributes to Luna and YFII’s Decline
Terra (LUNA) is designed to maintain the peg via mathematical algorithms and active trading. Recently, the UST has “de-pegged” from its value of $1 for a high selling pressure due to the massive drain from Anchor. Since they are bonded by on-chain mint-and-burn mechanics, that massive short led to sharp drops on both UST and its sister token LUNA. Then the “de-peg” happened.
As for the fall for YFII, most theories pointed out that it was caused by the DFI Money development team deciding to rug-pull. Rug-pull is a form of token release of the project and left to float after the team behind it is no longer interested in the token.
A Problem of Public Trust in Altcoins?
In face of Luna’s big bear market today, the Luna team is contemplating what to do to make Luna recover but on the other hand, can they recover luna? This is extremely difficult to do because it requires a lot of attention from the public and finance to power the project.
The team needs the community to trust them again and give them a second chance but the community is tired of the project due to the huge loss of funds and loss of lives. In fact, there is greater trust in mainstream currencies in the face of the public and the fiscal sector. Meanwhile, mainstream currencies (BTC, ETH, etc.) have shown stronger anti-risk capabilities when dealing with market turmoil.
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Source: https://coinpedia.org/press-release/luna-plummeted-99-and-yfii-dumped-70/