LUNA2 Rallies as Traders Short, Crypto Market Cap Rises, Market Trading Volume Goes Down
The price of LUNA2 shot up from $2 to as high as $3.58 during the day. The sudden spike in its price caused the liquidation of almost $4 million worth of trades on Bybit and Binance. In addition, there were a large number of short positions, according to data from Coinglass.
Traders are Shorting LUNA2
The global cryptocurrency market cap is currently at $1.23T, a 0.17% increase from the previous day. During the last 24 hours, the total volume of crypto traded is $60.03B, a 31% decrease.
Less than a month after the launch of the LUNA 2.0 blockchain, the price of TerraUSD has dropped by over 75%. Previously, enthusiasts regarded cryptocurrencies as the future of cryptocurrencies at that time. The blockchain was reportedly capable of promising various technological advancements. Due to the sudden decline of the UST and LUNA stablecoins, many investors became surprised by the sudden change in the market.
TerraUSD broke its US dollar peg in early May, which caused a major drop in the value of cryptocurrencies. Meanwhile, the UST blockchain was an algorithmic stablecoin that used arbitrage with its sister cryptocurrency, Luna. Through this strategy, it was able to maintain its value of UST; hence the collapse of both caused a $60 million loss in market cap.
Despite the price bounce, the funding rates for LUNA2 on both Bybit and Binance remained negative. It suggests that investors are still short despite the recent price movement.
Shadow Wallets FUD
The market sentiment of the LUNA2 token has been negatively affected by its recent performance. Due to its association with Terra, which recently collapsed, the token’s value has dropped.
Terraform Labs, the company behind the Terra blockchain, created LUNA2 to replace the cryptocurrencies they lost due to the project’s collapse. They also distributed it to the investors who suffered losses from the UST and LUNC airdrops.
Some investors who received the LUNA2 token might have decided to dump it to recover some of their losses. The token’s price has dropped by 85% since it peaked at around $12.24.
Some investors still holding onto LUNA2 are also avoiding the company due to allegations that its founder and CEO, Do Kwon, deceived them into thinking that he had zero LUNC tokens. A self-proclaimed insider named FatMan claimed that TFL and Do Kwon own over 40 million LUNA worth over $200 million.
The user also claimed that five shadow wallets hold over 42.81 million cryptocurrency tokens. These wallets allegedly all belong to Do Kwon as of June 9.
Fatman claimed that Do Kwon used his shadow wallet to approve his proposal, which involved establishing a community-owned chain. He also claimed that there are many more wallets just like this. According to Fatman, Kwon approved the proposal through manipulation.
Kwon Investigation Effect on LUNA2
Due to the growing scrutiny surrounding Terra Form Labs, LUNA2’s shares have been struggling. South Korea’s tax regulator fined the company about $78 million in May.
South Korea’s police and prosecutors are investigating allegations that a TFL employee stole money from the company.
The US Securities and Exchange Commission is also investigating TFL. As a result, the price of LUNA2’s shares could fall in June. It is because the company’s assets are considered illegal securities. Aside from the investigations, other factors such as legal pressures and the lack of positive sentiment about the company could also affect its performance.
Currently, there is a huge debate among experts regarding the reasons why the value of cryptocurrencies has been rising. Some believe it’s because people are still buying them, while others think they are merely a reserve in their infancy. After bitcoin hit highs in November 2021, the token reinforced the former view, but now it is not as the market tumbles.
