About 58% of traders were betting futures on higher prices for LUNA tokens, despite yesterday’s drop. The move resulted in over $63 million in liquidations, higher than usual and one of the largest LUNA futures in history.
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Liquidations on LUNA exceeded $106 million in the last 24 hours.
CoinDesk adds that there is still $387 million in unsettled futures contracts and there could be more volatile price action ahead.
Stablecoins such as UST are backed by a basket of assets based on LUNA and Bitcoin (BTC), and do not depend on centralized parties to hold these assets. The UST lost its peg this week and fell to $0.66 on Monday before recovering to $0.90 on Tuesday.
The environment was not so favorable in terms of recovery: UST fell below $0.35 on a drop in interest from traders. Even the non-profit organization Luna Foundation Guard (LFG), which had backup support for LUNA, did not save such a fall. They had to liquidate bitcoin assets in an attempt to save the UST peg.
The fall of LUNA has become one of the steepest for major cryptocurrencies in recent times. Prices have fallen by 85% in the last 24 hours as traders assessed the risks of LUNA tokens due to the loss of TerraUSD (UST) peg to the dollar.
Part of the explanation for the fall in LUNA is that parent company Terra appears to have released more tokens to sell on the open market and raise money to support UST. It was assumed that $1 LUNA could be exchanged for exactly 1 UST or vice versa. The additional release may have contributed to the sharp drop in LUNA prices over the past 24 hours.
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