The real reason for the crash of the digital currency Terra

What a bloodbath the crash of the Terra ecosystem was, but what’s the real reason it went so fast?

Last month was not a good month for cryptos. Then the Terra (LUNA) ecosystem suddenly collapsed. In addition to the LUNA token, the stablecoin UST was also dragged into the misery. This resulted in a decline of almost all cryptocurrencies. Many experts suspect that this was done on purpose.

Crash Terra

The purpose of this is to influence the price in order to get rich quickly. Nothing new in the world of cryptos. Incidentally, this is not unique. This also happens with normal stock exchanges. Just think of George Soros’ smash hit. In 1992, he forced the United Kingdom’s central bank to cut the link between the British pound and the Deutsche Mark. They were tied to each other, just as UST was tied to the US dollar. That’s called a ‘peg’. He shorted this and made billions as a result.

The analytics company Nansen recently conducted a study. They looked closely at the ‘on-chain data’ and then eight wallets came out that exerted influence. This includes crypto companies Celsius and Oapital.

setup

The analysts don’t think so. The major wallets started withdrawing UST from the platforms, leading to an excessive lack of liquidity and a knock-on effect. The lack of liquidity was the first stone that fell. This in a system that was already quite weak anyway.

Yet it is difficult to determine what the real intentions were. This is partly because it is not clear who owns the other crypto wallets. There is also no hard evidence that it was intentional. But also vice versa: it is possible that the first ‘attacker’ indeed had the intention to force the crash. The question is whether we will ever find out.