Terra LUNA Crypto Asset Plummets to Zero in Days

Digital currency or cryptocurrency traders were shocked by the plunge in Terra LUNA's price last week. The price of the cryptocurrency plummeted by 100%, falling below US$1 per coin in a matter of days.

Previously, Terra LUNA was traded at US$86.17 per coin on Wednesday, May 4, 2022.

On that day, the United States Federal Reserve (The Fed) raised its benchmark interest rate by 50 basis points to 1% to curb US inflation, which had reached 8.5% (year-on-year/yoy) in March 2022.

Following this, the price of Terra LUNA free-fell for nine consecutive days, reaching US$0.003559 on Thursday, May 12, 2022.

As of Wednesday, May 18, 2022, the price of this cryptocurrency was at US$0.000147.

Just one month earlier, Terra LUNA had been a favorite among investors, reaching a price of US$116 per coin on April 4, 2022.

(See also: Risk of Cryptocurrency Investment: Potential Losses up to 100%)

This tragic collapse led to the temporary suspension of Terra LUNA trading on various cryptocurrency platforms. This fall also highlights the high risk associated with investing in crypto assets.

Therefore, investors need to understand the characteristics of an investment instrument before investing their funds. They should not only consider the potential profits but also understand the potential for losses.

Since the end of last year, cryptocurrency prices have generally fallen in line with rising commodity prices, particularly energy and food commodities.

The cryptocurrency downturn continues alongside the increasing threat of interest rate hikes, a consequence of high inflation related to rising commodity prices.

(See also: 10 Big-Cap Cryptocurrencies: Dogecoin Takes the Biggest Hit)