Surprising mystery of the collapse: What were LUNA whales doing in the fall?

As several large Terra (LUNA) whales exited their positions, individual investors reportedly continued to accumulate in the early stages of the crash, according to reports.

Whales sold as LUNA collapsed, attracting individual investors

Jump Capital, a major investor in Terra, said in a recent report that some of the largest Investors in the UST stablecoin project.” He said it quickly sold out when the company collapsed in early May. In return, smaller and smaller wallets accumulated. Jump Capital noted that a series of large withdrawals and swaps in a UST liquidity pool caused the stablecoin to lose its dollar peg.

Also, a bunch of whale sales has intensified around Terra’s Anchor Protocol, which experienced a series of setbacks as the UST began to lose price stability. In this regard, Jump Capital references on-chain data in the report.

Anchor Protocol played a key role in the Terra crash

Jump Capital is a recent report by on-chain analytics firm Nansen that identifies seven major wallets that are exiting trigger anchor refers to the report. But these seven were part of a much broader trend. With over $1 million in anchor deposits, which Jump describes as “large” depositors, the whales have disposed of more than 40% of their assets on the platform during the initial depegging.

In contrast, retail investors holding less than $10,000 wallets on Anchor increased their holdings on the platform during this period. However, this demand was not enough to support LUNA and UST prices as they make up part of the overall liquidity.

The anchor log was essentially the starting point for the Terra crash as 70% of UST liquidity was tied up on the platform. The platform’s imbalance between depositors and borrowers also contributed to its eventual collapse.

Crypto sentiment also played a major role

Terra’s exits deteriorated due to weak crypto market sentiment. The depegging came after a market crash triggered by the Fed’s rate hike. Strong US inflation figures also contributed to this decline.

The collapse of Terra wiped out more than $30 billion in investor funds in just a few days. It has drawn regulatory anger worldwide and is expected to introduce stricter laws on crypto. As , the Japanese Parliament introduced the world’s first stablecoin bill. While Terra has now launched a new blockchain to restore some value, the project seems to have lost much of its reputation in the market.

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