On Sunday, May 8th, Caetano Manfrini took to Twitter to call out the massive dump experienced by LUNA. In his tweet, the blockchain business lawyer insinuated that the Luna protocol was experiencing a coordinated and deliberate attack from big players in the crypto space.
Luna dumped hard, losing 10% of its value within a short period. Approximately $285 million worth of Luna’s stablecoin, UST, was sold on Curve and Binance. The huge sell-off was accompanied by the multiple short positions opened across various exchanges. Also, several Tweets spreading FUD for the blockchain protocol were circulated on Twitter and Reddit.
Do Kwon, the founder of Luna, recently reminded his follower of the large reserves the protocol has. Aside from the millions of dollars of Luna the blockchain has stacked to maintain the stability of the UST token, Luna also has Bitcoin reserves worth billions of dollars to sustain the ecosystem.
Caetano and several other analysts believe the massive sell-off was coordinated and done to discourage more traders from investing in the blockchain protocol.
While LUNA was not the only coin that experienced a dip in price during that period, its sell volumes were huge, and the crypto-asset tanked much more than several other assets. Bitcoin lost over 3% within the same period, and Ethereum depreciated by 4%.
Following through on the blockchain transactions, it was discovered that UST, the stablecoin of the protocol, lost its perfect peg to the US dollar due to swift price fluctuations. Arbitrage traders decided to take advantage of this to make gains as the token traded at $0.985 for some time.
As traders swapped UST for LUNA, more UST was being removed from circulation, making the token gradually retain its peg to the dollar. However, traders also swapped UST to LUNA and LUNA to USDC and USDT. This caused a more intense plummet in the value of the Luna token. Luna is currently valued at $59.64, nearly 12% down from its high in the past 24 hours.