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Chukwuemeka Raphael
May 13, 2022
by Chukwuemeka Raphael

Lessons to Learn from the Market Implosion of Stablecoin Terra USD

TerraUSD

Table of contents

  1. Conclusion
TerraUSD (UST) is the stablecoin of the Terra blockchain. It currently stands in the 14th position in the CoinMarketCap ranking of cryptocurrencies in their market capitalization. It is trading at $0.6605 at the time of writing. However, it experienced a market implosion. TerraUSD saw its price gain a 24 hours minimum and maximum price of $0.2998 and $0.9206, respectively.

It ought to have equivalent value to the United States Dollar, but this implosion is its worst performance since its launch. It attained its maximum price of $1.05 on January 30th, 2021.

Some of the lessons to learn from this abnormally UST price are:

  • Always diversify your investment

  • History will always repeat in Crypto

  • Unhealthy competition could be costly

  • Endeavor to read and check out your portfolio at regular intervals

    • Always Diversify Your Investment

    Someone might ask, "is it not necessary to diversify stablecoins holdings since they are pegged to fiat and mostly the United States Dollar?" Stablecoins have extremely low volatility, unlike other cryptocurrencies. It will always be close to the value of the fiat at which it is pegged. Hence, it is essential to diversify.

    History Will Always Repeat

    Tether (USDT) and DAI experienced their market implosion at different times. As a result of the collapse of the Tether market, Bitcoin prices have been fluctuating at various exchanges with a wide margin. However, Tether (USDT) survived this instability. UST saw over 100% rise in its price. It attained its all-time low price of $0.2998 on May 11th, 2022. With this information, we can deduce that TerraUSD is on the part of recovery.

    Unhealthy Competition Could Be Costly

    Project founders need to realize that they are in the market to compete with others, not kill them. A recent tweet made by Terra founder Da Kwon stating that he would "see to it that DAI goes down" has been unearthed. This recent event could make them implement codes that could backfire. After Bitcoin split into Bitcoin Cash ABC and Bitcoin Satoshi Version (BSV), Craig Wright, a BSV proponent, commented he would ensure that Bitcoin goes down. Everything seemed to be working out for him till the market reversed. Bitcoin has performed far better than BSV since then. It proved that unhealthy competition could not just affect the project but also the investors.

    Endeavor to Read News and Check on Your Portfolio at Regular Intervals

    It is crucial that you keep yourself updated with the news and your portfolio. These news reports are a component of fundamental analysis and are one of the primary factors that could impact cryptocurrency prices. Reading information updates on the happenings in the market could have saved some investors from the recent loss that came close to a 2000% decline within 24 hours. Experts advise both short-term and long-term investors to indulge in this activity.

    Conclusion

    Cryptocurrency is here to stay. These lessons intend to safeguard investors from an avoidable decline in the value of their assets.

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    Tether USDT stablecoin Terra USD Market Implosion Terra blockchain
    Lessons to Learn from the Market Implosion of Stablecoin Terra USD
    Chukwuemeka Raphael
    Chukwuemeka Raphael is an author and cryptocurrency news writer/analyst. As a Mathematics graduate and trained analyst, he combines his Math knowledge and strong reading culture in contributing content and analysis for the development of cryptocurrency and blockchain space.

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