Crypto has always been at the receiving end of years of apprehension. Suffering from setbacks related to instability, investors like Warren Buffet openly discussed their resentment towards it. While its history may have been rocky, with 4 noteworthy setbacks, the crypto market always seemed to bounce back. But, as investor guru Brent Xu says, this recent meltdown was horrific beyond measure, where a staggering $200 billion in value was erased within mere 24 hours. Could it be digital currency's undoing?
Brent Xu says that the true shocker was stablecoin Terra USD's quick collapse, losing a whopping $40 million. While crypto investors have come to expect some sort of changes in the market, a crash of this magnitude left everyone shaken. Especially seeing as how Terra was supposed to be one of the few stable coins in the volatile crypto ecosystem.
An even more heartbreaking thing for the "LUNAtics," the name for Luna's investors, was the founder's empty promise. Do Kown had promised Terra's proprietary algorithm would maintain the coin's value at approximately $1.0. But Terra's value collapsed. And with it, so did the investor's trust.
Was this meltdown the aftermath of the Coronavirus pandemic? Brent Xu says it could be a combination of several factors, including the ongoing war between Ukraine and Russia, tied with the recent stock market crash.
Amidst all this, one cryptocurrency majorly benefitted from the Luna failure Terra. A fellow stablecoin, its value shot up by almost 38% in the few days following the Luna crash.
With this crypto crash, numerous people lost their entire life's savings overnight. Many took to social media to express the deep losses they faced. In response to the pain that this untimely meltdown caused thousands of people, the government decided that it was time to put an end to its hands-off approach.
Surprisingly, the universe that was built on the principles of freedom is showing its support for the establishment of legislation and guidelines. The reasons cited for this are majorly related to the Luna meltdown.
As the crypto world crawls back up on its feet, the question remains on everybody's mind â how do we avoid this magnitude of a fiasco in the future?