Luna 2.0, the replacement coin for the troubled Luna cryptocurrency that wiped out $60 billion in market capitalization when it plummeted last month, might currently be experiencing a dead-cat bounce.
The coin tanked 80% from its initial price of $17.80 on Saturday, investors seemed to rush back to support the replacement crypto, pumping Luna 2.0’s price up nearly 97% from its $6.15 floor to a high of $11.97 on Monday, according to CoinMarketCap. This took place only hours before Luna 2.0’s debut on Binance, which is the world’s largest crypto exchange.
On Tuesday at 2 a.m. ET, Binance listed the coin, registering the token in its Innovation Zone, a space for coins that “pose a higher risk than other tokens.” After paring Monday’s gains, the coin is currently trading 43% lower than its debut peak.
Crypto exchanges, KuCoin and OKX, are now trading Luna 2.0. On Twitter, CEO of Binance, Changpeng Zhao, said the exchange needed more time to prepare for Luna 2.0’s airdrop and listing due to its “large userbase.”
The price for Luna 2.0 will likely see heightened volatility after Binance starts the long process to convert user holding of Luna and TerraUSD, which are the two cryptocurrencies launched by Do Kwon’s Terraform Labs, into Luna 2.0, by airdropping the replacement coins into affected user wallets.
It’s anticipated that some holders of Luna will dump Luna 2.0 as soon as they receive their airdropped allotment, in an effort to recoup some of the losses from their initial investment.
Luna lost nearly all of its value earlier this month right after TerraUSD (UST) algorithmic stable coin lost its peg to the U.S. dollar, precipitating a meltdown in the crypto markets.
Luna was used by UST to aid in maintaining its value, thereby creating arbitrage opportunities for traders to help get the stablecoin back to parity with the U.S. dollar. Although, on May 9th, UST lost its dollar peg, which sent Luna into a death spiral, sinking the coin’s value to less than a penny. The crash wiped out roughly $60 billion in market capitalization from across the two coins.
But self-proclaimed “LUNAtics”—fans of Terraform Labs and its cryptocurrency “Luna”—are hopeful they can recoup their losses through a new project.
On May 25, Terraform Labs announced that it would launch a new version of the Terra blockchain backed by a new coin, Luna 2.0, following a majority vote from those holding Luna tokens. The new blockchain would not feature a stablecoin.
The old coins—Luna and UST—continue to exist as Luna Classic and TerraClassicUSD. Both are trading at significant losses: TerraClassic USD is trading at $0.02, while Luna Classic is trading at one-hundredth of a penny, according to CoinMarketCap. Binance was an early investor in Terraform Labs, the creator of the Luna and UST coins, leading a $32 million funding round in 2018. Zhao claimed that the exchange invested only $3 million in Terra and was not involved in later funding rounds.
