Money & Banking

Some industry players say the Luna crash could be the beginning of a long bear phase in the crypto market

All the top cryptocurrency exchanges in India, including WazirX, CoinDCX and CoinSwitch Kuber delisted Terra’s Luna from their platforms on Friday, after the crypto token saw an around 100 per cent drop in valuation over the past seven days.

Luna plunged from over $80 as of last Saturday to the $0.00003492 level by Friday afternoon. The market cap of the token, according to CoinMarketCap, was down from $27.6 billion to $252 million.

“At CoinSwitch, we periodically review the coins that we have listed to ensure they meet our highest standards. We have now decided to delist #LUNA to safeguard your interests and those of the larger crypto ecosystem,” the company said on Friday.

It added, “For those still holding Terra, we have enabled a window to sell and recover some value from your investment. While the ‘BUY’ option has been disabled, the ‘SELL’ option will be available till 5pm today. All active limit orders will be cancelled.”

“The Terra blockchain was briefly shutdown and restarted to implement a patch. This prevents new actors from staking on it as LUNA fell to 2 cents. As a result of this steep price decline and high inflation, the team behind LUNA, Terraform Labs stated that the move was made to “prevent governance attacks”. (As the cost of an attack had significantly reduced due to the price of LUNA tanking), Darshan Bathija, Co-Founder & CEO, Vauld explained.

CoinDCX, too, notified its users tweeting, “We have delisted UST and LUNA from the CoinDCX App on May 13, 2022. Users can continue to trade the above assets using other trading pairs available on the CoinDCX Pro and CoinDCX Web Platform.”

Minal Thukral, Executive Vice-President, Growth, CoinDCX told BusinessLine, “Huge overnight market volatility caused the collapse of the Terra network, leaving a ripple effect across the entire crypto ecosystem. The prospect of several crypto players with exposure to Luna are under stress. While this is certainly an unfortunate turn of events, we remain confident about the strength of the market recovery, which will happen in due course.”

She added, “As a precautionary measure, CoinDCX has halted transactions for LUNA to protect traders on our platform, and we will continue to monitor developments to decide on our next course of action. The interest of our customers remain our utmost priority, and we will continue to take decisive actions to protect them from the ongoing market volatility.”

Meanwhile, Unocoin halted LUNA and said it doesn’t trade in UST.

Crypto industry players have started reacting over the past couple of days, some calling it the Lehman Brothers moment for crypto.

“Luna Crash is the “Lehman Brothers” moment for the whole crypto market. Bitcoin has broken the key support of $30,000 and we have entered into a long bear cycle. Bear cycles are usually longer than bull cycles, so it could take half a year to get a positive long-term price growth in the crypto market. By that time more than 90 per cent of cryptocurrencies will eventually die due to a liquidity and volume crisis. Investors should use these market dips to buy long-term positions in Bitcoin and Ethereum, after managing enough cash and gold liquidity to beat rising inflation,” said Hitesh Malviya, Founder, IBC Capital and itsblockchain.com.

Published on May 13, 2022