Is Terra LUNA a Ponzi Scheme? How to Buy Terra LUNA 2022
If you are someone who stays up-to-date with the latest crypto market activities, then the news of Terra LUNA crashing down a few days ago must have caught your attention.
Sure, price declines and bear market periods aren't anything new to the crypto market, in fact, we have even seen Bitcoin drop below $30,000, which is less than half of its all-time high from November 2021.
However, saying that Terra LUNA went through a price decrease might be a bit of an understatement considering that it dropped from $120 per token to $0.02.
This black swan event took place between May 11th and May 12th, and some traders are even calling it the Terra LUNA price 'massacre'.
So what factors led to this crash of this crypto? Is Terra LUNA a Ponzi scheme?
In this article, we will discuss all of this and show you how to buy Terra LUNA 2022 in case you think that this is only a temporary drop.
Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.
Terra (LUNA) and TerraUSD (UST) are stablecoins that were launched in 2018 by Terraform Labs, a South Korean company run by Do Kwon.
The main objective was to build an algorithmic stablecoin in which Terra (LUNA) would be burnt each time Terra (UST) loses its 1:1 peg to the dollar and vice versa.
By doing this, more Terra (UST) would be minted and the dollar peg would be stabilized. For instance, if LUNA hit a $0.98 mark, a small amount of UST would be burnt, and if it increased to $1.02, a bit of LUNA would be burnt.
While there are stablecoins with similar goals (Tether and USD Coin, for example), none of them functioned in this manner.
All of this sounds like a great system, which is one of the main reasons Terra (LUNA) was considered one of the best crypto investments for a long time.
However, as it turns out, this system wasn't sustainable.
Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.
In case you're running short on time and can't go through our entire review, here are the quick steps you can follow if you want to 'buy the dip' of this stablecoin.
Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.
To put it simply, the main reason LUNA crashed was that Terra lost its peg to the dollar.
While there are lots of theories circling around, this could be a consequence of the ongoing concern regarding the Federal Reserve's impending interest-rate increase.
Some of the most popular crypto exchanges like Binance have temporarily banned LUNA withdrawals in the last few days to 'prevent governance attacks'.
Terra LUNA wasn't the only crypto affected – hundreds of coins lost a quarter of their value on the same day, but LUNA undoubtedly received the largest blow.
With global inflation growing stronger each day, investors seem to be turning their backs on cryptos and searching for 'safer' alternatives.
All of this combined led to what traders are calling a 'crypto winter'.
However, crypto exchanges and some of the biggest experts in the industry have stated that this period won't last for very long and that these conditions aren't permanent.
Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.
The CEO of Terraform Labs, Do Kwon, hasn't really built a great reputation on Twitter over the last couple of years, with many professional traders referring to him as 'arrogant and pompous'.
This is why some circles believe that the downfall of Terra was caused by personal attacks.
One of the theories that gained traction in the last few days was started by Charles Hoskinson, the founder of Cardano.
Hoskinson put out a tweet that said a large institution had borrowed over 100,000 BTC from the crypto exchange Gemini. Then, they traded that huge amount of Bitcoin for Terra (UST) for a big discount that Do Kwon provided. This directly decreased the liquidity of Terra (UST).
Next, he states that the institution then dropped these large amounts of tokens on the crypto market, which caused a liquidation avalanche and made investors sell their LUNA holdings in panic.
Charles explains that the crash happened because Terra was a Ponzi scheme from the beginning and that there weren't nearly enough Bitcoin reserves to prevent it.
Gemini denied these allegations and Hoskinson later deleted the tweet, but that doesn't dismiss the fact that these kinds of market manipulations are fairly common, regardless of the financial market.
Even if Gemini is telling the truth, Hoskinson tweeted that he is convinced that someone launched a personal attack on the Terra token.
While it's still early to make any accurate assumptions, social media is full of different speculations on what happened.
Also, the fact that Do Kwon was behind another failed stablecoin project called Basis Cash certainly doesn't help his case.
Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.
After a black swan event like this one occurs, it's very difficult to make any estimates of whether the affected token has a chance of recovering.
Although, if most of the inflated Terra LUNA tokens that are currently in circulation don't get burnt, the market cap could easily go back to around $40 billion and the price per token would be around $0.007.
Before it would reach the $0.1 price, it would have to flip the market cap of BTC, which is around $578 billion.
Whether Terra LUNA will go back to $100 per token again, it can only be possible if Do Kwon's recovery plan is implemented flawlessly, which would result in burning a large portion of LUNA's supply.
For instance, Shiba Inu has a supply of over 549 trillion, which is a lot more than LUNA, and it has a market cap of around $6.9 billion.
This means that pumping the price with a high supply isn't impossible, and we have already seen Shiba Inu do it in late 2021.
At the time of writing, the price of Terra LUNA stands at around $0.0002.
One of the recovery plans that Do Kwon has released is LUNA Classic – a Terra 2.0 network.
This method involves the Terra blockchain being forked into a new chain that doesn't include algorithmic stablecoins.
The old chain would be renamed Terra Classic (LUNC) and will coexist alongside Ethereum Classic.
It seems that this solution has the best odds of reviving Terra LUNA, especially since the LUNA Foundation Guard has allegedly spent the majority of its BTC reserves to try and stabilize Terra (UST) and return its peg to the dollar.
LUNA Classic is currently one of the hottest topics on Twitter.
After carefully reviewing all the leading crypto exchange platforms, we have concluded that eToro is currently the best place to buy Terra LUNA.
It is one of the rare exchanges that allow traders to purchase Terra LUNA via credit/debit card without charging any extra processing fees. Also, it supports most e-wallets such as PayPal, Skrill, and Neteller.
One of the main advantages of eToro is that it has ridiculously low trading fees. For instance, traders can purchase Terra LUNA for a trading fee of only 1% (not counting the spread). This type of fee system works great since traders know precisely how much they will have to pay for each transaction.
Additionally, eToro also has one of the most cutting-edge investing tools in the industry.
You can find beginner-friendly technical charts, professional traders' insights into the crypto market, and a comprehensive crypto news feed that will keep you informed on all the latest updates.
Not only that but there is also a unique social network on the platform on which you can communicate with other active traders and talk about potentially good investment opportunities.
Lastly, for beginners that are still not very experienced in trading, there is a 'Copy Trading' feature that allows you to, as the name suggests, copy the trades of professional investors in real-time.
With eToro, you can place your Terra LUNA tokens inside the exchange account or you can keep them in the eToro Money crypto wallet.
This wallet app is completely free and it's fairly simple to use, plus, you can use it to easily swap coins to the eToro exchange directly.
eToro is regulated by some of the leading institutions such as FinCEN, FINRA, FCA, SEC, ASIC, and CySEC.
Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.
Now that you know more about Terra LUNA and where to buy it, we prepared a detailed step-by-step guide you can follow to purchase it in no time.
If you don't already have one, you can open an eToro account by going to their official website and clicking on 'Join Now'.
You will need to provide some basic information such as name, email, phone number, address, and birth date.
Next, upload a photocopy of your ID to verify your account. eToro is very strict about AML regulations so you will have to provide a recent financial statement as well.
Once you open up your account, you should deposit funds into it.
There is a minimum deposit of $10 (appx. £7) that applies to new users.
eToro offers numerous depositing methods – these include credit card, debit card, bank transfer, PayPal, Neteller, Skrill, and many more.
One of the upsides of the platform is that there are no depositing fees.
Once you open up the main eToro dashboard, you should go to 'Trade Markets' > 'Crypto', and use the search box to find Terra LUNA.
After doing so, click 'Trade' to initiate a new order form.
We reached our final stop – buying Terra LUNA.
After clicking on the 'Trade' button from the previous step, you should type in the exact amount of LUNA you want to purchase.
On eToro, there is a stop loss/take profit amount option that you can also set up if you're interested.
Finally, once you've inserted the desired amount, simply click on 'Open Trade' to finalize the purchase and get your LUNA tokens.
Cryptoassets are a highly volatile unregulated investment product. No UK or EU investor protection.
Terra LUNA has been considered one of the best crypto investments for a long time due to its spectacular performance over the last two years.
However, all of this changed when the black swan event took place last week.
While most investors are selling their Terra assets increasingly fast, there are also those that see this as a great 'buy the dip' opportunity and believe that Terra LUNA will increase in value in the following period.
Whether Terra LUNA was a Ponzi scheme from the beginning or it just had a stroke of bad luck, it's still too early to tell.
Nevertheless, if you choose to buy Terra LUNA, we suggest you do it through eToro.
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Disclaimer: Analytics Insight does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read more here.