Luna 2.0, the replacement coin for the defunct Luna cryptocurrency that wiped out $60 billion in market capitalization when it crashed last month, might be experiencing a dead-cat bounce.
After tanking 80% from its debut price of $17.80 on Saturday, investors seemingly rushed back in to support the replacement crypto, pumping Luna 2.0’s price up 97% from its $6.15 floor to a peak of $11.97 on Monday, according to CoinMarketCap. The price surge took off hours before Luna 2.0 debuts on the world’s largest cryptocurrency exchange, Binance.
Binance listed Luna 2.0 at 2:00 a.m. Eastern on Tuesday morning, registering the token in its Innovation Zone, which is a space for coins that “pose a higher risk than other tokens.” After paring Monday’s gains, the coin is currently trading at 43% down from its debut peak.
Other crypto exchanges, such as KuCoin and OKX, are already trading Luna 2.0. But on Twitter, Binance CEO Changpeng Zhao claimed the exchange needed more time to prepare for Luna 2.0’s airdrop and listing due to its “large userbase.”
Luna 2.0’s price may see more volatility after Binance starts a yearslong process to convert user holdings of Luna and TerraUSD—the two cryptocurrencies launched by Do Kwon’s Terraform Labs—into Luna 2.0, by “airdropping” the replacement coins into affected user wallets.
Some holders of Luna are pledging to dump Luna 2.0 as soon as they receive their airdropped allotment, in an effort to recoup some losses from their now worthless investment.
The Luna cryptocurrency lost almost all of its value earlier this month after the TerraUSD (UST) algorithmic stablecoin lost its peg to the U.S. dollar, precipitating a meltdown in the crypto markets.
UST used Luna to help maintain its value, creating arbitrage opportunities for traders to help get the stablecoin back to parity with the dollar. Yet on May 9, 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 so-called LUNAtics—fans of Terraform Labs and its Luna cryptocurrency—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.
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