As the selling frenzy continued on Terra’s native assets LUNA and UST, BitMex became the latest to limit trading services of the said tokens.
On Thursday, crypto trading platform BitMex said that it would delist the LUNAUSD and LUNAUSDT perpetual swap contracts, citing the lack of stable spot prices available for the underlying indices.
The contracts will be settled at 20:00 UTC on 12 May 2022 and upon expiry, the profit and loss of perpetual contracts will be added to the user’s Bitcoin balance, according to the exchange.
The announcement sees LUNA and UST join a long list of exchanges that had halted trading of both tokens amidst a drastic price decline. Earlier in the day, Binance Futures also took down LUNA perpetual contracts on its platform. The futures arm of the world’s largest exchange by volume also slashed the maximum leverage on USDT-margined LUNA perpetual contracts to 8x from an earlier figure of 21-25x.
Yesterday, leading South Korean crypto exchanges – Upbit and Coinone decided to scrap LUNA trading for its users. The move prompted exchanges Korbit and Bithumb to “designated investment warnings” to their users.
Introduced to the crypto market by BitMex in 2016, crypto perpetual are characterized by the availability of high leverage, sometimes over 100 times the margin. An auto-deleveraging mechanism forces traders to forfeit a portion of their profits to cover losses during periods of high volatility.
LUNA tokens are meant to reinforce the Terra network by backing reserves of stablecoin, UST. In theory, UST maintains its peg by minting and burning LUNA. However, once UST lost its 1:1 peg against the U.S. dollar on 9 May, investors initiated a massive dump on both tokens.
Losses spiraled even further on Thursday after Bitcoin declined to yearly lows of $28K. At press time, LUNA traded at $0.09, down by 99.8% from its all-time high while UST revisited lows of $0.65.