The disaster! Billions of dollars lost in less than 24 hours. The crash of Luna and TerraUSD has left us all on the brink of a nervous breakdown. The algorithmic stablecoin, TerraUSD, lost its peg dramatically due to the collapse of Luna, its older sister. Why? Well, the general collapse of the stock markets explains part of the story. However, in Luna’s case, many are talking about an attack orchestrated by some George Soros-style “evil genius” during the sterling crisis of 1992. The Luna-Terra duo entered a “death spiral” creating a “Lehman Brothers” moment for the crypto ecosystem, thus hurting thousands of retailers and businesses.
The damage is already done. And the fear now is, of course, the possible effects of this crisis. The first thing that comes to mind is Tether. This is when one feels a cold behind the neck. We all know that Tether is a ticking time bomb. However, the community has been very lenient on this issue for a very long time. Denial, convenience, irresponsibility, greed. I do not know. It is possible that this “lunatic” crisis will not go any further, because it is mainly about young investors putting their own savings at risk. There are not many banks involved. There are not many institutions in the game. So the domino effect is limited. ORA similar crisis with Tether could become much more serious. Of course, Tether is not an algorithmic stablecoin like TSD. In theory, Tether could respond to a massive flight, because it (supposedly) has the deposits to support its peg. Well, let’s hope the Tether folks have all their books in order.
Elon Musk did it again. It is a pattern repeated over and over again. Now it turns out that the deal to buy Twitter is on hold. And what happened? Twitter stocks plummeted due to his tweet. Which is very convenient for the person who is raising the capital to make the acquisition. It’s not about the money. It’s about “freedom of expression.” But maybe it is about the money. Apparently, all this stuff is due to bots. Elon didn’t know about the bots? Tesla’s purchase of BTC was also followed by a strange tweet about mining. Didn’t Elon know that many miners use unsustainable energy?
Bitcoin and other cryptocurrencies have seen huge declines as investors flee speculative assets due to macroeconomic uncertainty and the dangers of a potential recession. Coinbase, the largest exchange in the United States, has lost more than 2 million users in the last 3 months. Despite a slight recovery in prices in the last few hours, you have to be very reckless to declare a bottom at this time.
Now, let’s talk, with a critical eye, about the most popular crypto news of the week.
Breaking: Terra Blockchain Officially Halted After LUNA Price Collapse
Of course this is the news of the week. The bomb! It tragically reminds us that anything is possible. The first thing I thought of when I heard about the crisis was Mike Novogratz’s tattoo. Yes, the well-known investor, CEO of Galaxy Digital, got a “Luna” tattoo. Apparently, the tattoo was done to celebrate the milestone of $100 per unit in December of last year. Now let’s do a mental exercise. Let’s imagine that a user X has said then that in a short time the price of Luna would reach zero. What would have been the response of the Luna community?
In this space, there is a lot of fanaticism. Blind faith causes many to take too many risks unnecessarily. Reading Luna’s Reddit forums is scary. There are people who have lost everything. Why did they put it all into one asset? Well, because they become the followers of a cult. The same happens with Bitcoin, with Ethereum and with the other projects. They do not diversify. They do not manage risk. Why not? Because the idea that Bitcoin and cryptocurrencies are a “safe haven” is being sold. The Luna case reminds us that we are dealing with high-risk assets.
42,500 bitcoins reportedly moved from the Luna Foundation Guard wallet as UST’s peg to the US dollar fell apart
Earlier in the week, project co-founder Do Kwon warned that the atypical movement in his BTC wallet was the result of a coordinated attack on the protocol. Those were the moments before the disaster. What really happened? Was there fraud? Who did the attack? Was there an attack? Was it an error in the algorithm?
The Central Bank of the Argentine Republic does not allow banks to offer operations with cryptocurrencies
This storm is, without a doubt, a serious blow to the credibility of the entire ecosystem. It is a storm within a storm. And, at times like these, users ask for protection and regulators feel the pressure to regulate. During a crisis, capital is tempted to flee the third world to take refuge in the dollar. Governments, in response, become paranoid about it.
The president of El Salvador showed scale models of Bitcoin City and the new airport
“Buying the dip” is not always a good idea. In other words, Salvadoran bond investors must be breaking a sweat right now. First of all, we are talking about public funds. Second, we are talking about a debt that must be paid in dollars. In third place, El Salvador arrived very late in the bull cycle. In other words, he bought too expensive. Did we get to the bottom?
In my opinion, it is very premature to declare a floor at this time. It is still too early to assume that the worst is over. We still don’t know for sure the duration of this wave of nervousness in the markets. Not all falls are opportunities, nor are all moments to buy.
Bitcoin price drops below $30,000 for the first time in ten months
What was your purchase price? How much debt are you? How stable is your portfolio? What would happen, if Bitcoin reaches $15K? How would your style of the day be affected in the event of a deeper drop? How’s your emergency fund? We all feel like geniuses during a bull cycle. We often fall into overconfidence. However, our luck can change at any time. It is always good to be prepared in case of a setback. I mean, I mean the prudent reorganization of our portfolio to minimize risks. How diversified are you? How exposed to volatility are you? It is not a matter of promoting pessimism. In reality, it is a matter of investing with strategy and prudence.
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