Luna: From blood in the streets to a whole bubble, some conversations after the crypto crash

People often look for other investment options, especially during downturns in the stock market. Traditionally, gold was viewed as a safe haven, but in recent times, the market has been teeming with cryptocurrencies, especially stablecoins.

The terra (UST), a stablecoin designed to peg the value of the US dollar, and its sister currency, the luna, both declined. Luna, an unstable stablecoin, was selling for around $118 just a month ago, but it is now almost worthless. Cryptocurrency has managed to erode the fortunes of millions of investors, many of whom are from India.

The stock market and the crypto world have attracted a large number of new investors over the past two years, due to the bull market being driven by liquidity in a low interest rate environment. Over 20 million Indians invested in cryptocurrency in 2021 alone. However, recent crashes in both markets have affected how investors view them. The recent market crisis has exposed the falsity of many market inaccuracies, particularly in the lesser-known field of cryptocurrency and blockchain technologies.



While most investors start with the more popular Bitcoin and Etherium, they quickly move to altcoins in search of bigger profits. The entire ecosystem was affected by the bitcoin crash. In November 2021, Bitcoin peaked at $69,000. It dropped to $33,000 in just over two months, and is currently trading at around $30,000.

conversations

A fall like this has investors on the verge of jumping out of their skin. Many insightful opinions have been expressed by a generation that has grown up in the age of the Internet. Some of the discussions we heard on Pushstart about cryptocurrency and blockchain include:

  • Budget 2022: India’s budget for 2022 does not inspire confidence in cryptocurrencies. While the government introduced cryptocurrency for the first time in the budget, it imposed a 30% income tax on all virtual digital assets (VDAs) and 1% TDS on every transaction, with no carry forward or set-off. This has increased the cost of cryptocurrency trading in the country.
  • Regulations: Due to the huge fluctuations of the asset class, crypto communities around the world have called for a global regulatory framework to prevent incidents like the Luna crash. As many investors feel that decentralized technology like blockchain should not have a regulatory authority, it has become necessary to make a movement for self-regulation.
  • Buy on the dip: Although the crypto market has had a bull market for the past couple of years, crypto groups seem to be moving away from the “buy any price” and “buy dip” trading mentalities. Markets have proven their superiority by reflecting the fact that prices do not rise constantly. Veterans say, a lot of new investors are learning old lessons.
  • Intrinsic value: Communities are discussing the possibility of using some cryptocurrencies in addition to the intrinsic value of the asset class. Terra was dubbed the pyramid scam by billionaire Bill Ackman, who advocated self-regulation in the sector. He claims that the failure of coins like Terra has reduced investor confidence in blockchain technology, which he considers great.
  • Advertising: Blockchain-related companies have been aggressively marketing and advertising in the past two years. These commercials were often deceptive, stating that investing in cryptocurrency was a simple way for people to make money. This crypto collapse has shown the world that this is not the case.
  • Bubble: Every market goes through a cycle of fear and greed. Smart money enters when fear is high, while greed is often at the helm of the market, followed by a bubble, and finally a big drop. Historically, the stock markets have had deflation bubbles, but many people are wondering if this is the end of cryptocurrency.
  • Technical Analysis: Technical analysis, study of charts, price movements, and patterns, I think, are required to make money in cryptocurrencies. While many investors have burned their hands with cryptocurrencies, they are trying to adapt by learning about technical analysis and researching future possibilities.
  • BUY!: “The time to buy is when there is blood in the streets,” famously said Nathan Rothschild, is what many dealers suggest doing. With cryptocurrencies dropping to new lows, many individuals are considering making straddle investments in them.

Blockchain technology, which powers cryptocurrencies, is something I believe in. Whether there is a pause in the cryptocurrency price playback or not, the underlying technology is incredible and will undoubtedly be the technology of the future. Whether or not this is a pause in “going to the moon” coins, only time will tell.


(Pushstart founder author. Opinions are his own).

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