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May 2022 The Terra and Luna collapse
In May 2022, the stablecoin TerraUSD lost its dollar peg and its sister token Luna fell to almost nothing, wiping out tens of billions of dollars.
- Date
- May 9–12, 2022
- Token
- TerraUSD, Luna
- BTC fell
- < $30,000
What happened
TerraUSD was an algorithmic stablecoin that relied on a second token to hold its value. When confidence broke, a death spiral followed within days. The foundation behind it had bought bitcoin as a reserve to defend the peg, and sold much of it as the crisis deepened.
Bitcoin fell below $30,000. The shock spread to lenders and funds in the following weeks, and led to several more failures over the summer.
Why it mattered
Terra was the first domino of the 2022 crypto crash. Read Bitcoin in 2022.
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