: Opinion: Future of cryptocurrencies #IndiaNEWS #News By Gavin Brown, Richard Whittle, Stuart Mills If you had invested £100 (2) in the cryptocurrency Luna a month ago, you might have been quietly
Opinion: Future of cryptocurrencies #IndiaNEWS #News
By Gavin Brown, Richard Whittle, Stuart Mills
If you had invested £100 (2) in the cryptocurrency Luna a month ago, you might have been quietly confident you’d made a sensible bet. But Luna’s value has since fallen drastically – on May 13 almost turning zero.
Luna was by no means the only victim in a week where cryptocurrencies were down 30%. Some have recovered to a certain extent, but this still represents an aggregate seven-day loss of over 0 million, prompting existential questions about the future of the market.
Financial ‘Attack’
This crash was possibly triggered by a financial “attack? on the stablecoin Terra (UST), which is supposed to match the US dollar. Its partner coin, Luna, subsequently collapsed.
An attack of this kind is extremely complex, and involves placing multiple trades in the crypto market in an attempt to trigger certain effects – which can provide the “attacker? with significant gains.
In this case, these trades caused Terra to fall, which in turn brought its partner coin Luna down too. Once this was noticed, it caused panic, which in turn sparked market withdrawals, which then caused further panic. Some (but not all) stablecoins rely to a large extent on perception and confidence – and once this is shaken, big falls can come into effect.
Crucially, the recent major falls in cryptocurrencies have called into question just how stable stablecoins really are. After all, they are designed to have practically zero volatility by maintaining a “ped YH [ Z[] Y] HYX Y[ YZ [ ݙ[ H Hܞ XK ܙX]H [H^HZ[ 8$܈XX H ܜH [8$H8'XY^x܈ܞ
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