Saturday, August 13, 2022
Home Crypto News Market Report Suggests Large Terra Investors Abandoned LUNA And UST Before Things Went...

Report Suggests Large Terra Investors Abandoned LUNA And UST Before Things Went Wild

- Advertisement -
Follow-Us-On-Google-News

The company noted how small UST became the major victim of Terra’s collapse. 


Following the unfortunate incident that rocked the Terra ecosystem and the entire crypto market last month, more information has emerged about what caused TerraUSD (UST) and LUNA to suffer a mind-boggling crash.

According to a recent report published by Jump Crypto, the cryptocurrency arm of Chicago-based Jump Trading, noted that UST crashed massively because large investors pulled out of their positions moments after the stablecoin lost its peg.

 

Large UST Investors Excited While Small Ones Trooped In 

While large UST investors were exiting their positions in the stablecoin, small traders were busy buying the dip with the hope that the cryptocurrency will rally again considering the heavy venture capitalists backing the project.

However, things did not happen that way, as the exit of large investors from Terra tokens left a massive vacuum that could not be filled by the entrance of small traders.

In the report written by Jump Crypto researchers Nihar Shah and Maher Latif, while large investors exited the Terra Anchor program as early as May 7, 2022, a day after UST lost its peg to the dollar, smaller investors trooped in a few days later.

These small investors hoped to capitalize on the whopping 20% ROI that the Terra team is offering. However, little did they know that the big players are closing their position in the cryptocurrency.

According to the report:

  • “First, the episode was triggered by a combination of trades in the UST/3CRV pool during a seventy-five-minute window on Saturday, May 7.
  • These trades involved TFL withdrawing UST liquidity, and two wallets putting large UST sell orders through the pool, upsetting the pool’s balance and depth.
  • outflows from Anchor — particularly overnight on May 7 and on the morning and early afternoon of May 9 — put substantial pressure on the UST peg.
  • Large depositors disproportionately drove the outflows. In fact, small depositors increased their exposure during this episode.
  • the crypto market selloff on May 9 added additional pressure to UST, which may have finally pushed it off the peg by several hundred basis points.
  • As a coda to the de-pegging, as the on-chain burn mechanism started printing LUNA to burn UST, the supply of LUNA skyrocketed and the price of LUNA collapsed.”

Jump Crypto’s Relationship With Terra

It is worth noting that Jump Crypto was heavily involved in the defunct Terra blockchain. Jump Crypto president Kanav Kariya is a member of Terra’s governing council and is listed on the TerraForm Labs website, suggesting how close Jump is to Terra.

Despite the relationship between Jump Crypto and TerraForm Labs, the report failed to highlight its role during the collapse of Terra ecosystem tokens.

Although Jump Crypto refused to discuss the role it played during the collapse of UST and LUNA, it is common knowledge that large Terra investors exited earlier than small traders did during the depth of the stablecoin.

Large VCs Massive Gain

As reported earlier, Panthera Capital disclosed that it made over 100x profit from Terra ecosystem tokens before the cryptocurrency crashed tremendously.

According to Joey Krug, Panthera’s fund’s co-chief investment officer, the company made over $170 million from its initial investment of $1.7 million.

Discussing how lucky Panthera Capital was with Terra tokens, Krug said:

“For the large portion which we sold over 2021 and part of 2022, it was a really simple risk management reason. It kept becoming a larger and larger part of the fund and so we had to de-risk it since you can’t really run a liquid hedge fund with one position being a super large portion of the fund.”

Similarly, Hack VC and CMCC Global were also lucky enough to close their positions on Terra tokens before things got out of hand.

- Advertisement -

Disclaimer

The content is for informational purposes only and may include the author’s personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

Ammara Mubin
Ammarahttps://thecryptobasic.com/
Ammara Mubin is a cryptocurrency reporter and trader with vast experience in the industry. Mubin has written several news stories related to the crypto industry, including non-fungible tokens (NFTs), decentralized finance (DeFi), fundraising, mining, etc. Her major focus is covering regulatory events that are capable of shaping the entire crypto ecosystem.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisment -

Recent News & Articles

IOG Says “Getting Things Right” Is The Priority After Cardano Investor Asked When Vasil Will Launch

  IOG has responded to ADA investors who are eager to know the exact date for the launch of the Vasil hard fork.  Input Output Global...

The Deputy Minister Of Digital Transformation Says Ukraine Should Launch A CBDC

Alex Bornyakov is in support of a digital hryvnia. In a four-tweet thread on Friday, Ukraine's Deputy Minister Of Digital Transformation, Alex Bornyakov, argues that...

Shiba Inu Lead Developer Gets A Harsh Response From “Can You Pet The Dog”

  "Can You Pet The Dog" Shuns Shiba Inu Game, Shiba Eternity As It Wants Nothing To Do With Crypto Projects. ...

Shiba Inu And BONE Becomes Top Trending Coins in Asia, USA, and Canada

Shiba Inu and Bone are trending worldwide. window.coinzilla_display = window.coinzilla_display || ; var c_display_preferences...

NOWNodes Adds Support for Shiba Inu Burn Portal Reward Token Ryoshi Vision (RYOSHI)

  The listing of RYOSHI will enable developers to build on Ryoshi Vision via NOWNode's platform. window.coinzilla_display =...

71,225 XRP Holders Now Stand With Ripple Against SEC, Deaton Says All XRP Investors Are Leaders Of XRPArmy

  The Amici attorney has commended XRP investors for their collaboration toward Ripple’s legal battle against the SEC.  ...

One Year After Burning Mechanism Launched, 2.5 Million Ethereum Worth $5B Burnt, Is ETH Becoming Deflationary?

  About 2.1% of Ethereum's circulating supply has been burned since the London hard fork. window.coinzilla_display = window.coinzilla_display...

Subscribe To Our Newsletter

Get Updated with All The latest Crypto News, Articles, Reviews, Analysis and much more. Delivered Every Monday.