Remember those happy go lucky days when charts showed stability in “stablecoins” and cryptocurrency was viewed as an alternative to counter inflation and government corruption of the economic system in concert with the central banks?
Those were good times in March of 2022, good times.
Last week I pointed out the end of LUNA which believe it or not did trade at fractions of a penny for a while there with some awesome sarcasm from Twitter (at least I hope it was sarcasm!):
Oof. And the last trade is still somewhat, err, dead still:
Yup, that’s definitely a flat line and they’re going to need a lot more zeros to the right of the decimal point if it is going to stay active on the fringe exchanges.
The “stablecoin” which is supposed to be pegged as 1 coin = 1 US Dollar was used by the Luna foundation to provide a stable peg for the cryptocurrency. Unfortunately for Terra which created LUNA did not escape unscathed as their stablecoin UST has crashed also. The news hit the pages of cNET with this interesting article:
Luna Crypto Crash: How UST Broke, Why It Matters and What’s Next
From the article’s conclusion as to why it matters, an illustration on just how destabilizing this action is:
First, over $15 billion in crypto value has been wiped out through luna and UST alone. There have been anecdotal reports of self-harm by those who had most of their savings staked in UST — though these can’t be confirmed, it’s clear that a lot of people lost a lot of money in the collapse. The damage isn’t contained to Terra’s ecosystem though, as Fortis Digital’s Boroughs notes. Many who were exposed to luna and UST would have sold off big parts of their crypto portfolio to recoup some of the damage, pulling the entire market down.
In other words, Ponzicide.
Today the Terra UST stablecoin still trades but not at parity with the USD:
If this is “the event” which leads to Senile Joe’s Treasury Secretary Senile Janet Yellen moment to intervene, there is little reason to doubt that the entire cryptocurrency market could take a 50% haircut, or more, from current levels.
Charlie Munger of Berkshire Hathaway summed it up when discussing crypto best by wondering if Communist China was right:
“In my life, I try and avoid things that are stupid and evil and make me look bad in comparison to somebody else – and bitcoin does all three. In the first place, it’s stupid because it’s still likely to go to zero. It’s evil because it undermines the Federal Reserve System … and third, it makes us look foolish compared to the Communist leader in China. He was smart enough to ban bitcoin in China.”
Good luck as if anyone in the crypto world does not think that the government can’t or will not intervene to rig markets, I simply have to words for you: