Following the Terra (LUNA) collapse, the head of the Office of the Comptroller of the Currency (OCC) is highlighting the reasons. And Urges to be careful with Luna 2.0 price
Acting Comptroller of Currency Michael Hsu, in a recent interview on Yahoo Finance Live, said he believed Terra’s collapse exposed the instability of the crypto space.
He quotes that there are a number of facts that the Terra crash has bought into light. But he just wants to focus on three. Firstly, he asserts that stablecoins are not stable as the name suggests. Because the $18-dollar stablecoin faced a drastic crash so quickly.
Second, he says that cryptocurrency surges are often the result of mere hype. He thinks this is also one of the reasons for Terra’s crash as it was publicized.
Third he points out that the threat of transmission exists. As the selloff triggered a bigger selloff in the bitcoin market. According to Michael Hsu, there was a loss of half a trillion in such a short period of time. This reflected other stablecoin’s stability as well, resulting in Tether’s depegging.
Therefore, he claims that a few of these lessons show some volatility that exists in the cryptocurrency space. Everyone should take this seriously.
Know Your Returns
Further, Hsu talks about Terra being called a ponzi scheme. He quotes that a crypto hedge fund manager once said that if we ever fail to know where the return is emerging from, then it’s most likely coming from a future holder.
There was a lot of hype as well as a lot of the comebacks he highlighted last year. This statement was made by Hsu in order to ask where exactly are the returns coming from?
Accordingly, he urges everyone that it’s important to understand and know the answer to your source of return. If anyone is investing in crypto, this is even more important.
