The past week has been a dark period in crypto history, with the industry’s total market cap falling as low as $1.2 trillion for the first time since July 2021. Around May 4th, Terra (LUNA) ranked among the top 10 most valuable cryptocurrencies on the market, with a single token trading at $85 and an all-time high at $119.5. However, by May 11, the price of the asset had fallen to $15. And 48 hours later, the token has lost 99.98% of its value and is currently trading at a price of $0.00003465. The turbulence caused by the Luna is due in large part to the real-time decomposition of Terra, a Cosmos-based protocol that powers a number of algorithmic stablecoins. At the same time, the demise of Terra calls into question the real-world utility and long-term viability of algorithmic stablecoins.
The inherent properties of algorithmic stablecoins contributed to the decline
Unlike Tether’s USDT or Circle’s USDC, which are backed by fiat money or equivalent assets, Terra is designed to maintain pegging via mathematical algorithms and active trading. Recently, due to the massive outflow from Anchor, UST has “decoupled” from its $1 level for high selling pressure.
As they are linked by on-chain mint-and-burn mechanics, this massive short led to sharp drops in both UST and its sister token LUNA. Then the “de-peg” happened. When traders realized that $1 worth of LUNA was no longer for $1 UST, they defaulted. As a result, LUNA plummeted 98% of its price and lost most of its market cap.
What can we learn from Luna?
Faced with such a Luna dip, many investors may be concerned – how can I prevent such a dip from happening to me? In fact, the characteristics of altcoins determine Luna’s volatility and high risk. In terms of risk resilience, mainstream currencies (Bitcoin, Ethereum, etc.) are undoubtedly stronger. However, the bitcoin market has not been stable lately. The market is in a cold winter – shrouded in a bear market. But there are still traders who actually earn more than 1000% ROI in a bear market 100x leverageevery trader can multiply his ROI.
How does 100x leverage work?
With 100x leverage, traders can use 1 BTC to open a position of 100 BTC by going long (predicting BTC price to go up) or going short (predicting BTC price to go down) . It allows traders to trade $1 as $100, at the same time, traders can also get all profits that bring the $100. Let’s use an example to illustrate how 100x leverage works. Suppose we use 1 BTC to open a long contract when Bitcoin is trading at $30,000. A day later, the price of bitcoin surges to $35,000. Profit is ($35,000 – $30,000) * 100 BTC / $35,000 * 100% ≈ 14.2 BTC, giving a 1420% ROI.
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Bexplus’ 100% deposit bonus The campaign also helps every trader to maximize their profits as much as possible, whether in a bullish or a bearish market. If you top up 1 BTC, there will be 2 BTC in your account and you can trade the 2 BTC to get a bigger profit. You can also withdraw the winnings made with the bonus. With this 100% bonus, you can earn 14.2 BTC×2=28.4 BTC in the example above, making your ROI 2840%. Attention! Up to 10 BTC bonuses can be received.
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