Terra crash has no long-term effect on the cryptocurrency ecosystem, says the co-founder of Huobi Global

Jun Du, Co-Founder of Huobi Global, says the Terra crash is no risk to widespread adoption of cryptocurrency as an asset class. The sudden crash of Terra (LUNA) and TerraUSD (UST) has confused the investment decisions of retail investors, as the fall of stable cryptocurrency questions the stability of the whole crypto asset class. 

According to him, this crash has just slowed down the investor enthusiasm for a while. Still, it is not an expected behavior over time, as the demand for cryptocurrency in the market surges. 

The exchange co-founder is prophetic that demand for some potential cryptocurrency like Bitcoin will grow as a hedge against inflation. The current gen investors know the value of money, and they never want to fall prey to fiat currency's inflation rate. Moreover, with the advent of new blockchain applications, the demand for cryptocurrency as an alternative to fiat grows. 

Du envies that crashes are not meant to occur only in cryptocurrency, while every industry has a fair share of toppled players. Du cited a few cases, specifically the housing market crash and Lehman Brothers collapse. He said every industry has to depend on its demand for endurance and stability. A sudden event at odd times is not sufficient to prove the game-changing ability of an industry. 

He adds that one bad apple in the short run is not enough to disprove crypto's potential as an innovative technology and asset class that will change the lives of millions of unbanked people. Cryptocurrencies are unique and irreplaceable. And when the BTC price surges, the crypto market will gain confidence. So despite the bumps in the road, Du is optimistic that the road will lead to success in the future. 

He advised taking the LUNA crash as a lesson, noting the flaws exposed. According to him, the primary reason for the Terra crash was stablecoin being backed by volatile tokens. He said the assets in the future should be rebalanced with less volatile tokens. It is natural to make mistakes, but the best we can do is not repeat them over time. Decentralized stablecoins are inevitable for revolutionizing the entire blockchain space, and we can turn this loss into a win by not letting the tragic crash happen again. 

LUNA's price dropped by 20% earlier this month due to a UST dump by a whale. Terra's crash is one of the biggest price meltdowns the crypto market has experienced. But, the market recovery will retain the hope. 
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Annamalai V


An enthusiastic writer on the crypto and blockchain niche. Content strategist and whitepaper writer who has worked with a ton of leading projects in the cryptocurrency space. My passion to draft content will never get old.


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