Sat. Apr 13th, 2024

Market Pundit: UST And Terra (Luna) Collapse Is NOT An Indication That Crypto Market Is Ending

By Mahesh Limbani May 21, 2022

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Crypto Market Is Not Ending Because Of Terra.

Since the collapse of the Terra blockchain ecosystem, there has been a pessimistic sentiment spreading within the crypto market.

This could be the reason why the entire crypto market has taken a bearish hit in recent days. Also, the anti-crypto entities want to capitalize on the current issues facing Terra to convince the world that blockchain and crypto technology is unreliable. On the other hand, there are people like Dr. Sean Stein Smith.

Dr. Smith is an advisor to the Central Bank Digital Currency Think Tank. He’s also an assistant professor at Lehman College.

Clearly, Dr. Smith is strongly pro-crypto and doesn’t mince his words in sharing his opinion about the industry’s future.

In a recent post, he opines that, although the Terra ecosystem was a bit of an embarrassment for the crypto community, it doesn’t signal the end of the crypto and blockchain industry as a whole.

Stablecoins Have Been Adopted Widely

Dr. Smith went on to say what almost everyone already knows, which is that stablecoins have achieved broad adoption due to their flexibility and ability to bridge the glaring gap between cryptos and fiat currencies.

Ideally, a stablecoin is supposed to be at par with the USD; one stable coin = 1 USD. As such, stable coins introduce a much faster and less costly means to switch between various cryptos and between cryptos and fiat.

On the part of UST, the stablecoin’s functionality is primarily entrenched in an algorithmic system.

This has the advantage of keeping tabs on the USD market movements automatically without manually altering or adjusting the prices.

Ironically, this was the fatal flaw that allowed an attacker to manipulate the system and lead to the crash of the Terra ecosystem.

Crypto Regulation Boosts Adoption

Cryptocurrencies have barely existed for a decade, meaning that regulatory authorities are still learning how to formulate appropriate policies to govern the industry.

While only a few governments have undertaken the task of regulating the crypto space in their jurisdictions, it’s clear that regulation is encouraging crypto adoption. That’s why cryptocurrencies and stable coins are here to stay.

As a matter of fact, the crypto industry has seen a massive influx of institutional funds into the markets.

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