So far, the year 2022 has been punishing for the traders of digital assets. Many things that have gone wrong this year, include –
- Bitcoin’s (BTC) decline in price (lowest since the year 2020)
- The crypto market cap drop from $3 trillion to $1.2 trillion over a period of 5 months
- The demise of Terra’s token LUNA, which was once a very popular digital currency.
The Risk of Crypto Trading
No wonder, organizations like the European Central Bank are contemplating whether investing in crypto is really worth the risk. However, the head of FTX.US, Brett Harrison, has some mixed opinions to share.
According to Harrison, a lot of capital has entered into the crypto’s private equity space. Many teams are working hard to create and build new infrastructure. He is optimistic that as new projects enter the scene more investors will return with their investments.
Stablecoins will not lose their Demand
When it comes to the fate of stablecoins, Harrison feels their demand will not be affected much. DeFi’s (Decentralized Finance) underpinnings come majorly from the stablecoins which are backed by fiat. Harrison does not feel that these stablecoins will suffer the same fate as Terra.
Speaking of volatility, Harrison commented that assets exist in different degrees of volatility. This is true for assets across all exchanges – traditional equity, futures, commodity and crypto. It is therefore very important to inform buyers about the associated risks at the time of purchase. Transparency along with solid regulation will ensure that Terra’s LUNA tragedy is not repeated.