Luna is worth less than 2 cents after a single-day crash of 99% as sister coin Terra loses dollar peg

• Luna is down 99% Thursday, falling to under $0.02 per coin.
• The cryptocurrency is linked to stablecoin TerraUSD, which lost its US dollar peg this week.

Luna is worth less than two cents, losing 99% of its value amid a broad decline in the cryptocurrency market.

The coin is linked to TerraUSD, an algorithmic stablecoin that's in the spotlight this week after losing its peg to the US dollar. Luna is a kind of temperature check for sister coin TerraUSD, meant to absorb market turbulence and shockwaves amid volatility.

The latest rout in the cryptocurrency market comes as the market plummets alongside other risk assets. The total market capitalization of all cryptocurrencies fell to a new 2022 low Thursday. Bitcoin was trading as low as $25,000 Thursday morning, but had retraced some losses to climb back toward $30,000 around 11:30 a.m. ET.

Terra is a stablecoin that uses an algorithm to maintain its dollar peg, compared to a coin like Tether that are backed up by holdings of fiat currencies and other assets. The code erases portions of Luna coin to keep Terra at or above one dollar.

But Terra isn't backed by liquid assets. Instead, the token is supported by about $3.5 billion in reserves of bitcoin. Terra's turmoil has pushed investors to dump Luna on fears that a critical part of the whole crypto ecosystem is coming undone. Luna has gone from support at $85 to its current low of around $0.01.