Luna’s catastrophic plunge doesn’t bode well for bitcoin
The LUNAUSD chart shows a waterfall effect, as the cryptocurrency capitulated from a high of $119.34 on 5 May 2022 to a paltry $2.69. This savage decline is a 97.75% loss of value, 96% coming in the last three days
Luna is the native token of the Terra blockchain protocol and was supposed to stabilise the price of the protocol's stablecoins via complex code. The point being that Terra's blockchain attempted to peg the stablecoin to the dollar. This absolute surrendering of value is akin to a bank run, and we may forgive one for arguing a failed experiment.
However, the failure here may have dire consequences for bitcoin. This is because Luna Foundation Guard (LFG), an organisation supporting Terra, holds billions in bitcoin. I.e. the odds are narrowing that LFG may need to dump these due to Luna's catastrophic decline.
Reference:
www.cnbc.com
Russell Shor
Senior Market Strategist
Russell Shor is a Senior Market Strategist at FXCM, having been promoted to the role in 2025 in recognition of his depth of insight and consistent delivery of high-impact market analysis. He originally joined FXCM in October 2017 as a Senior Market Specialist.
Russell holds an Honours Degree in Economics from the University of South Africa, is a certified FMVA®, and a full member of the Society of Technical Analysts (UK). With over 20 years of experience in financial markets, his work is renowned for its clarity, precision, and strategic value across asset classes.
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