Binance warns to delist Terra’s LUNA if it falls below 0.005 USDT

Binance warned on Thursday that if the price of LUNA went below 0.005 Tether, or around half a penny, it will delist the LUNA/Tether trading pair.

Terra shut down its whole network shortly after Binance issued its tweet, leaving the circulating supply of 34 billion LUNA in limbo, and then restarted it around two hours later.

LUNA is the Terra ecosystem’s native token. According to CoinMarketCap, its price has dropped as low as $0.01302(R0.21) in the last 24 hours, representing a 99% drop for the second day in a row. It was trading at $0.02074(R0,33) as of this writing.

Binance has already reduced the tick size, or minimum transaction size, for various LUNA trading pairs, including the euro, British pound, Ethereum, and Australian dollars, by the time it made the news early Thursday.

Binance has had to do this several times in the last week since the price of LUNA has fallen below the minimum transaction size, making it hard for individuals to cash out. The exchange, which offers over 600 cryptocurrencies, has seen $6 billion(R 96.5B) in LUNA trades in the last 24 hours, accounting for around 8% of all trades in the previous day.

The LUNA token has been in free fall while Terraform Labs, the organization behind the Terra ecosystem, considers suggestions to save it and its native stablecoin, TerraUSD (UST), from total collapse.

LUNA is intended to assist UST, an algorithmic stablecoin, in maintaining its dollar peg using a mint-and-burn mechanism. UST can always be exchanged for $1(R 16,04) worth of LUNA and vice versa.

However, as UST gradually lost its dollar peg during the previous week, investors were able to cash in UST, regardless of its value, for $1(R 16,04) worth of LUNA. According to CoinMarketCap, UST fell as low as $0.29(R4,67) in the last week. That means investors who made the arbitrage trade would have made a 70% profit by selling their LUNA.

This has put LUNA under significant selling pressure. Moreover, Binance suspended LUNA withdrawals earlier this week “due to a high volume of pending withdrawals transactions.”