An Investigation into Possible Market Manipulation

The Terra Luna price continues to trade in a sideways trend a month after its value dropped by over 40 per cent following the collapse of the FTX crypto exchange. Today, despite it going up by a percentage point and extending yesterday’s bullish trend, which saw its price spike by 5 per cent, data still shows that its long-term trend will likely continue to be horizontal, within the narrow price margins of between $1.5 and $1.8.

Terra Luna Fundamental Analysis

The Terra stablecoin was once considered a promising project in the world of cryptocurrency. However, a series of events in May 2022 led to its collapse, which in turn sparked the downfall of two companies closely associated with it: FTX.com and Alameda Research. Now, federal prosecutors in the United States are reportedly investigating the founder of FTX.com, Sam Bankman-Fried, for possible market manipulation that led to the Terra-LUNA crash.

According to the New York Times, U.S. prosecutors in Manhattan are examining whether Bankman-Fried manipulated the price of TerraUSD (UST) and LUNA to benefit the two companies he founded. The investigation is reportedly still in its early stages, and it is not yet clear whether the prosecutors have found any evidence of wrongdoing. Bankman-Fried has denied any involvement in market manipulation.

A recent analysis by blockchain and crypto analytics firm Nansen sheds more light on the events leading up to the collapse of FTX and Alameda Research. The report notes that the Terra stablecoin collapse, and the resulting liquidity crunch, likely started a domino effect that led to the downfall of the two companies. The report also highlights the close ties between FTX and Alameda and suggests that the over-leverage of collateral may have made the eventual collapse of Alameda “inevitable”.

The events surrounding the collapse of Terra, FTX and Alameda have shaken the cryptocurrency community and raised questions about the risks and potential for wrongdoing in the industry. The investigation into Sam Bankman-Fried and the possible market manipulation that led to the Terra-LUNA crash is a reminder that, despite its decentralized nature, the crypto world is not immune to the same types of financial misconduct that have plagued traditional markets.

The close ties between FTX, Alameda and Terra, and the over-leverage of collateral, as detailed in the Nansen report, also highlight the need for greater transparency and accountability in the cryptocurrency industry. 

The exact cause of TerraUSD and LUNA’s collapse is still unclear, but it is clear that the fallout from the incident has had far-reaching consequences. The Terra network (now Terra Classic) halted block production in May after UST lost its dollar peg, causing LUNA’s price to sink to near zero. It remains to be seen whether the federal investigation into Bankman-Fried will uncover any wrongdoing and what impact this will have on the future of the cryptocurrency industry.

Terra Luna Price Forecast

As seen from the above fundamental analysis, Terra Luna is already suffering from negative investor sentiments, coupled with controversies surrounding the collapse of FTX and Alameda. Looking at the chart below, these problems look to be impacting its performance in the market, dropping by 33 per cent in November and looking likely to resume the bearish trend this month.

Therefore, based on the current price action, there is a high likelihood we might see the price falling below the $1.5 price level. It is likely that we are in a long-term bearish trend, where the possibility of Terra Luna price trading below $1 by next year is high. A trade above $2 will invalidate my analysis.

Terra Luna Daily Chart

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