The replacement coin for the collapsed Luna cryptocurrency, which crashed last month and wiped out $60 billion in market value, may be seeing a dead cat bounce.
According to CoinMarketCap, after dropping 80% from its original price of $17.80 on Saturday, investors seemed to rush back in to support the replacement currency, sending the price of Luna 2.0 up 97 percent from its $6.15 floor to a high of $11.97 on Monday. The price spike started only hours before the launch of Luna 2.0 on Binance, the world’s largest cryptocurrency exchange.
On Tuesday, at 2:00 a.m. Eastern time, Binance added Luna 2.0 to its “Innovation Zone,” a zone for currencies that “offer a higher risk than other tokens.” After paring Monday’s gains, the currency is now trading at 43 percent of its debut high.
Other cryptocurrency exchanges, such as KuCoin and OKX, already accept Luna 2.0. However, Binance CEO Changpeng Zhao said on Twitter that because to their “large userbase,” the exchange required more time to prepare for the airdrop and listing of Luna 2.0.
The price of Luna 2.0 may see increased volatility once Binance starts a years-long process of converting user holdings of Luna and TerraUSD—the two cryptocurrencies launched by Do Kwan’s Terraform Labs—into Luna 2.0 by “airdropping” replacement coins into affected user wallets.
Some Luna 2.0 holders have committed to sell their tokens as soon as they get their airdropped distribution, in the hope of recouping some of their losses from their now-worthless investment.
The Luna cryptocurrency lost virtually all of its value when the TerraUSD (UST) algorithmic stablecoin lost its peg to the US dollar earlier this month, sparking a crypto market crisis.
UST used Luna to help maintain its value by offering traders arbitrage opportunities to help get the stabecoin back to parity with the dollar. However, on May 9, UST lost its dollar peg, causing Luna’s value to drop to less than a penny. The crisis wiped out roughly $60 billion in market value across the two currencies.
Terraform Labs and its Luna cryptocurrency, known as LUNAtics, fans are attempting to recoup their losses with a new venture.
Terraform Labs said on May 25 that it would launch a new version of the Terra blockchain backed by a new currency, Luna 2.0, based on a majority vote among persons owning Luna tokens. The new blockchain would not have a stablecoin.
Luna and UST coins are still in circulation as “Luna Classic” and “TerraClassicUSD,” respectively. According to CoinMarketCap, both are trading at significant losses: TerraClassic USD is selling for $0.02, while Luna Classic is trading for one-hundredth of a cent.
Binance led a $32 million investment round for Terraform Labs, the creators of the Luna and UST currencies, in 2018. Zhao said that the exchange only invested $3 million in Terra and did not participate in following funding rounds.