VanEck and 21Shares’ Terra investment products drop over 99%

Key Takeaways:

  • 21Shares' Terra investment product drops 99%
  • VanEck's Terra ETN met the same fate
  • Are other ETP issuenrsin trouble?
Terra,  VanEck and 21Shares’ Terra investment products drop over 99%
image from terra.money

YEREVAN (CoinChapter.com) – Terra (LUNA) ‘s recent crash sent ripples across other cryptocurrencies and evaporated Terra investment products’ value. Notably, Switzerland-based investment manager 21Shares saw its Terra exchange-traded product (ETP) drop by over 99%. Likewise, Terra exchange-traded notes (ETN) from VanEck met the same fate and traded at roughly 1 cent on May 19.

Terra ETPs collapse following LUNA suicide

In detail, ETPs are types of securities that track an underlying asset, in the case of LUNA ETPs. They trade on exchanges similar to stocks meaning their prices often fluctuates daily. Moreover, the underlying investment defines the ETP prices. Thus, Terra ETPs traded in correlation with LUNA.

Also read: Terra LUNA suicide shakes the crypto market; Do Kwon “heartbroken”

Moreover, according to Bloomberg Intelligence, the crash of LUNA ETPs is unprecedented across the market. The infamous implosion of the VelocityShares Daily Inverse VIX Short-Term ETN (XIV) in 2018, dubbed the “Volmageddon,” took second place. Notably, the product was liquidated after dropping 93% in a single session, triggering a market-wide turmoil.

Hany Rashwan, 21Shares’ chief executive, commented on LUNA’s demise and the subsequent ETP implosion.

As LUNA experiences low prices and high volatility it is likely that exchange spreads will continue to widen, which may ultimately lead to delisting on the part of the exchanges.

said the CEO.

Also read: Terra risks facing legal action after its native token LUNA crashes 99%.

21Shares further noted that their indexed products are prone to volatility that inherently plagues the underlying crypto assets. The investment manager further asserted that it would “meticulously monitor products” to ensure maximum protection for its clients.

Are other ETP issuers worried?

21Shares and VanEck were not the only investment companies hit by the LUNA implosion. DeFi Technologies subsidiary Valour launched a Terra ETP in Feb. 2022 and confessed to “difficult times ahead.” The CEO, Tommy Fransson, commented that LUNA’s demise halted all trading at Nordic Growth Market (NGM) exchange.

Conversely, digital asset manager WisdomTree claimed to have a system that minimizes the influence of anyone cryptocurrency on the rest of the investments. Dubbed the RWM WisdomTree Crypto Index, it features an array of cryptocurrencies, including LUNA.

WisdomTree Terra exposure was minimal. Source: WisdomTree Crypto Index Factsheet.
WisdomTree Terra exposure was minimal. Source: WisdomTree Crypto Index Factsheet.

Also read: Stock market selloff is far from over — 3 reasons why.

Before the price drop, LUNA comprised 7.5% of the index and declined to 0.7% after the crash.

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Terra,  VanEck and 21Shares’ Terra investment products drop over 99%

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