The Terra (UST), a stable coin designed to value the US dollar, and its sister currency, the luna, have both declined. Luna, a volatile stablecoin, sold for about 118 just a month ago, but is now virtually worthless. The cryptocurrency was able to erode the assets of millions of investors, many of whom were from India.
The stock market and Crypto World have attracted a large number of new investors in the last two years due to the liquidity-driven bull market in a low interest rate environment. In 2021 alone, more than 20 million Indians have invested in cryptocurrencies. However, recent crashes in both markets have affected how investors view them. The recent market crisis has dispelled a number of market misconceptions, especially in the lesser known areas of cryptocurrency and blockchain technology.
Although most investors start with the more popular Bitcoin and Etherium, they quickly move to altcoins in search of bigger profits. The collapse of Bitcoin damaged the entire ecosystem. In November 2021, Bitcoin peaked at around $ 69,000. It has dropped to $ 33,000 in just two months and is currently trading at around $ 30,000.
As a result of such a fall, investors are on the verge of jumping out of their skins. A generation raised in the Internet age has expressed many insightful opinions. Some of the discussions we’ve heard at Pushstart on cryptocurrency and blockchain include:
- Budget 2022: India’s budget for 2022 does not inspire confidence in cryptocurrency. Although the government has introduced cryptocurrency for the first time in the budget, it has imposed a 30% income tax on all virtual digital assets (VDAs) and a 1% TDS on each transaction, with losses not taken forward or set off. As a result, the cost of trading cryptocurrencies in the country has increased.
- Control: Due to the significant instability of the asset class, crypto communities around the world have called for a global regulatory framework to prevent incidents like the Luna crash. Because many investors feel that a decentralized technology like blockchain should not have a regulatory authority, a movement for self-regulation has become necessary.
- Buy Deep: Although crypto has been a bull market for the past two years, crypto groups seem to be moving away from the ‘buy-a-a-price’ and ‘buy the deep’ trading mentality. The fact that the markets have shown their dominance reflects the fact that prices do not continue to rise. Many new investors are learning the lessons of the age, experts say.
- Implicit value: Communities are debating the usability of certain cryptocurrencies as well as the underlying fundamental value of the asset class. Terra has been described as a pyramid scandal by hedge fund billionaire Bill Ackman, who advocated self-regulation in the sector. He claims that the failure of coins like Terra has eroded investors’ confidence in blockchain technology, which he considers a great one.
- Advertising: Companies affiliated with Blockchain have been aggressively marketing and advertising for the past two years. These ads were often deceptive, claiming that investing in cryptocurrencies was an easy 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, when greed is often considered the top of the market, followed by a bubble and finally a big fall. Historically, stock markets have seen bubbles deflate, but many wonder if this is the end of cryptocurrency.
- Technical Analysis: Technical analysis, study of charts, price movements and patterns, I believe, are needed to make money in cryptocurrency. Although many investors have burned their hands with cryptocurrency, they are learning about technical analysis and trying to adapt by looking for future possibilities.
- Buy !: As Nathan Rothschild famously said, “It’s time to buy when there’s blood on the street”, which is what many traders suggest. As cryptocurrencies plummet to new heights, many people are considering investing in them.
Blockchain, a technology that underpins cryptocurrencies, is something I believe. Whether or not there is a break in the price of cryptocurrency, the basic technology will be incredible and undoubtedly the technology of the future. Only time will tell if this is a “temporary suspension” of the “going to the moon” currency.
(The author is the founder of Pushstart. Opinions are his own.)