May 12, 2022 · Market Crash
Luna/Terra Crash
The $40 billion algorithmic stablecoin death spiral
Crypto Fear & Greed
12
Extreme Fear
Source: Alternative.me, May 12, 2022
Bitcoin price
$27,000
30-day change
-35%
Lower 30 days later
What happened
The Terra/LUNA collapse in May 2022 was a watershed moment for crypto markets. The algorithmic stablecoin UST lost its dollar peg, triggering a death spiral that destroyed $40 billion in value within days. LUNA went from $80 to near-zero, UST depegged permanently, and the contagion spread to Three Arrows Capital, Celsius, Voyager, and eventually FTX. The event fundamentally changed how media and regulators viewed stablecoins, accelerating regulatory conversations globally and killing the algorithmic stablecoin narrative almost entirely.
Key narratives
- Stablecoin risk
- DeFi contagion
- Regulatory urgency
About the score
The score is the daily value of the Crypto Fear & Greed Index, Alternative.me, a composite of market and attention data. Perception’s own media-based reading for the same day is in the daily sentiment archive for May 12, 2022.
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