Value of cryptocurrency TerraLuna drops 98% in 24 hours

The value of cryptocurrency TerraLuna plummeted by around 98% this week, after a stablecoin currency linked to TerraLuna, called terraUSD (UST) decoupled from its pegging to the US dollar.

Terra Luna’s token peaked at a value of $118 (£96) in April 2022, and fell 99 per cent to $0.09 on 12 May.

Companies behind stablecoins try to ensure they remain in parity with tangible assets such as the US dollar – with one token typically equalling one dollar.

However, last week terraUSD decoupled itself from its dollar pegging, sending its value and that of related cryptocurrency TerraLuna, tumbling.

Binance, a leading crypto exchange, temporarily suspended all withdrawals on Luna currencies on Wednesday.

Addressing holders of the cryptocurrency on Twitter, Do Kwan, TerraUSD’s founder, said:

“I understand the last 72 hours have been extremely tough on all of you - know that I am resolved to work with every one of you to weather this crisis, and we will build our way out of this.”

TerraUSD is one of the most popular tokens, but the result of its dramatic fall has spooked investors, leading many pulling out of major cryptocurrencies resulting in jolts to the marketplace.

Companies behind stablecoins try to ensure they remain in parity with tangible assets such as the US dollar – with one token typically equalling one dollar.

The combined market value of all cryptocurrencies is now reportedly $1.12trn - around a third of its November 2021 value, with more than 35 per cent of losses coming this week.

Panic resulting from TerraLuna’s plunge this week has also wiped value off of other popular tokens: 20 per cent off of Ethereum, while Tether lost its $1 peg and slumped to $0.96 according to CoinBase.

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