Tuesday, November 29, 2022

Reflecting on the Cryptocurrency Terra Luna Crash

Cryptocurrency Terra Luna

The Cryptocurrency Terra Luna crash shocked the crypto world upon its unfolding a while back. In an upset that shook the crypto world, Terra came crashing down. The Cryptocurrency Terra Luna’s plummet towards the crypto abyss was so impactful it de-pegged the stablecoin TetherUSD(UST). Such a massive collapse can teach us a lot upon reflecting on it.

The Bigger They Are, The Harder They Fall

Cryptocurrency Terra Luna was a massive project. The project capped among the top ten elites in the crypto market. The Terra snowball started to get bigger and bigger, big enough for the enthusiasts and even some ‘experts’ to think it might never fail. The crypto market is volatile, and not even the most prominent names out there are safe. This crypto winter is the most significant proof, with giants such as bitcoin and Ethereum tumbling around massive losses in value. The crash proved that any coin could vanish, fail, and plummet, even if it grew to become a giant. The bigger they are, the harder they fall, and the cryptocurrency terra Luna fall from its peaks was a hard one.

Do Not Fall for Hype

During its rise, Cryptocurrency terra Luna had a very devoted fanbase. The problem with the ‘bullish’ crowd is that it can lead to overinflated advice. These so-called experts push the narrative that this is the next unicorn in the crypto market. This phenomenon, referred to as hype, can be very misleading. Hype can often lead you to opt not to do your research and fall for illusions of grandeur.

Moreover, terra Luna failed due to its flawed stabilization system. A fact that is open for anyone to notice and discuss, and it even took many coins down before. These hype merchants will sell you the hype and jump ship as soon as they see any cracks in the image, leaving you to deal with losses they promised you would not be possible.

Diversify Your Investments

A key aspect of investing is diversifying your investments to limit your losses. To expand on this idea, you need to observe the many regular buyers and big names in the crypto scene and how they dealt with cryptocurrency terra Luna. Buyers from all categories, small and big investors rushed to buy vast amounts of Luna, put all their eggs into the Luna basket, and when it came crashing down, the losses were unpassable. Various buyers lost their lifetime savings, and some big names lost millions of dollars. When you invest in a sole option, you lose all your investment budget. On the other hand, when you diversify your options, if one goes to dust as luna did, you still have other walls on which you can lean. Many investment options can create a safety net for you.

Is it Decentralized?

De Kwon, the founder of cryptocurrency terra Luna, flaunted how decentral his coin is—brushing off comments from skeptics, even making fun of them on Twitter. But when the light started to dim on Luna, the community revealed an extremity bleak and non-transparent centralized method of operation for cryptocurrency terra Luna.

Additionally, it was clear during Terra’s darkest hours that the average holder had no control whatsoever over his share and the fate of his investment. Many whales made last resort efforts and immense rushed decisions to try and save the coin, but as we all know, the currency died and killed the notion of it being a decentralized coin.

Finally, the last nail in the decentralized label coffin was when De Kwon stealthily froze the whole terra blockchain and assets without any warning. The community was cheated, with the rug swept from under their feet. This is the main reason investors should opt for a decentralized option, never to be subject to such deceit, and yet Terra managed to disappoint its users.

Stablecoins won’t Protect You

Stablecoins are coins backed up 1:1 to a real-world currency. Cryptocurrency terra luna did use USDT to become a stablecoin. Many buyers felt safe buying it since it is a coin backed up with an accurate value. Terra never proved its backing. De Kwon kept dismissing the questions and worries and again went to Twitter to call skeptical coin holders poor.

Moreover, the crash did de-peg the USDT, and with it, all safety of knowing that your coin has its worth in actual currency was gone in a second. This is a valuable lesson to learn. Stablecoins will not protect you. You are responsible for ensuring you don’t remain unprotected in the volatile world of cryptocurrencies.

Concluding Thoughts

Lastly, the eternal advice is never to invest more than you can afford to lose. The crypto market can be the land of innovation and financial revolution, yet it is poorly regulated. The fear of missing out and the hype building can be your downfall, do your research and invest in what suits you more.


Inside Telecom provides you with an extensive list of content covering all aspects of the tech industry. Keep an eye on our Cryptocurrency section to stay informed and up-to-date with our daily articles.