On the other hand, the developers of the accused fraudulent projects have recently reported that they were victims of an information war designed to cause panic among investors. This information has still not been confirmed in any way. Both funds reportedly have knowledge regarding the insolvency of the lucrative Luna system and use it to trigger downward move. According to reports circulating on the web, Citadel and BlackRock funds contributed to the collapse, putting a 'stick between the spokes' by selling a huge amount of UST tokens and Bitcoin, which may have contributed to the panic sell-off. News of a possible speculative attack on the project was provided by Cardano cryptocurrency CEO Charles Hoskinson, among others. Source: CoinDeskĪ speculative attack caused Luna sell-off? Originally, Luna informed that in the event of a decline in Bitcoin's price, it will try to prevent further declines by buying BTC around $ 22,000 level. Luna Foundation was forced to liquidate its Bitcoin reserves to support the failing UST price. However, this did not prevent massive declines and did not change the speculative nature of this market. For several months, information about 'Ponzi schemes' and financial pyramids on the cryptocurrency market had been circulating. The existence of similar risks in the cryptocurrency ecosystem was highlighted in a report by, among others, the ArkInvest investment fund, run by Cathie Wood. Information about technological advancements and algorithmization was also credible. Investors were blinded by price increases, which alone are not an indicator of long-term success and strong fundamentals. The scale of the De-Fi trend popular in this bull market meant that a small number of projects were really closely scrutinized by cryptocurrency market participants. The way Luna was built created a huge systemic risk that only became apparent in the face of investor outflows. Luna's rise in popularity and the massive price rally lent credibility to the project in the eyes of investors, and the project's media CEO DoKwon gained popularity on Twitter. The market ignored the warning signs when the Waves project's stablecoin Neutrino, which was supposed to reflect the price of the dollar, collapsed over a month ago.
achieve high returns on investment while not taking risks. This is somewhat reminiscent of the adage where investors wanted to 'have the cake and eat it too' i.e.
Luna's story exposed the truth about the recurring behavior of people who, seeking an escape from risk, engaged in seemingly safe, 'stable cryptocurrencies'. These features attracted the attention of many market participants who wanted to avoid the risks of owning other cryptocurrencies. The creators of Luna created a system that was supposed to provide a return on passive investment of up to 20% and act as a 'safe haven' asset even during market crashes. Thanks to the rising price and market capitalization, the investors' rewards were also increasing, which attracted additional participants. During this time that Luna attracted interest due to its increasing reward rates for providing liquidity in the system. During the massive post covid surge of cryptocurrencies, millions of fresh investors entered the market and outbid each other to buy various 'trendy' projects. Luna benefited from a popular trend in the cryptocurrency world called DeFi, or 'decentralized finance', which allowed holders of projects like Luna to benefit from advanced financial mechanisms that rival the offerings of the traditional banking system.
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