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4 Big Lessons You Must Learn from the $LUNA Crash

The Terra LUNA crash was the most shocking thing witnessed in the crypto world. The token went from over $110 to a fraction of a penny, raising questions about the stability of cryptocurrency and sparking caution (and fear) among traders.

Cryptocurrency chart

LUNA had everything to guarantee a robust ecosystem, from a forward-thinking team to reliable infrastructure, partnerships, tokenomics, and minting/burning mechanisms. Despite that, the project almost died!

Not all hope is lost, though, since the team believes the token will recover sooner or later. Regardless of what happens, the LUNA crash should be a lesson for traders.

1.     Big Projects Can Fail Too

The devastating collapse of LUNA reminded us that no cryptocurrency is protected from risk, no matter how massive its market cap and growth level.

This is a big lesson, especially for traders who think giants like Ethereum and Bitcoin can never fail. The truth is that these coins are subjected to risk levels just as high as other tokens. You never know who’ll fail a test under pressure.

Attacks and protocol errors, albeit minor, can wreak havoc in the crypto world. Ultimately, even big players can lose the trust of their community and come crashing down.

2.     The Crash Can Be Quick

If there’s anything more devastating than the LUNA crash itself, it’s the fact that the historical downfall was a matter of hours!

As LUNA’s stablecoin, UST, dropped to $0.4 during the market downtrend and its peg to the US dollar broke, LUNA lost 90-95% of its value.

Before that, the token had a great uptrend.

As a trader, you should be aware that a project may not give you enough time to secure your assets and close your positions. You must be proactive and always stay prepared for a situation like this.

The best way to do this is by defining Stop Loss and Take Profit orders in all projects. 

3.     A Coin is Worth $0 if it Loses Users’ Trust

One of the most important lessons you must learn from the LUNA crash is that the price of cryptocurrencies is dictated by the people using those assets.

You may wonder why a particular coin is worth more and how its price is X and not Y and the answer is simple. It all depends on users.

For example, if Bitcoin users decide at this very moment that the token is worth $100 only, it’ll be traded for $100 – not a cent less or more. 

In the case of LUNA, the community realized that the token’s value wasn’t what they thought after the de-pegging of UST. Consequently, they started to devalue it until it hit rock bottom.

See? It’s always the community that forces the price of a cryptocurrency.

4.     Exchanges Aren’t Trustworthy in Times of Crisis

Another big lesson traders learned from the LUNA crash is not to trust centralized exchanges like Binance and


To secure the money on the exchanges when the crisis hits the market, they may suspend withdrawals and lock assets for a certain period.

Besides this, when so many people try to connect their wallets and save their funds amidst the chaos, it causes the web servers to go down, and the interface to become irresponsive.

Hence, cashing out your crypto assets during a crisis is impossible. This is what happened during the LUNA crash.

So, what should be your plan of action?

First, always use decentralized exchanges, and second, place the Stop Loss order for all your positions.


This post is for informational purposes only. Please DYOR and consult with a financial expert before making any critical decisions.

Keywords: lessons you must learn from the LUNA crash, cryptocurrency, crypto world