Inflation is a haze that pervades every developed economy on the planet.
The Russian-Ukrainian conflict, the epidemic, and the global supply chain disruption… It is indisputable that, in the wake of the globalization wave that has swept the world in the last two decades, no country can exist peacefully on its own. The vast amounts of oil and natural gas produced by Russia, the high-quality and low-cost industrial items supplied by China, and the grain produced by Ukraine as the “granary of Europe”… These once-abundant daily essentials have all been unexpectedly disrupted.
The fear of growing inflation has outweighed the desire to stimulate the economy in the United States, Europe, and other industrialized regions. Inflation of 8% to 10% is enough to put many families in a bind. However, the supply is insufficient, and there is no other option.
There is probably just one way for central banks to raise interest rates, despite the fact that everyone knows it will lead to a downturn. Inflation can be contained, however, when interest rates are raised and all types of assets decline in value.
In this aspect, the United States, in particular, has the most sensitive sense of smell. The United States was the first to hike rates, and Europe, along with the rest of the world, had to follow suit. It’s like the final round of a poker game; the house has already raised, and you must call even if you don’t have any cards in your hand.
All hazardous assets are, in one word, “unsupported by one tree” in such a fatal condition of interest rate hikes. For the time being, Bitcoin and Ethereum are only recognized as “risk assets.”
Do you believe in the hypothesis of the “super cycle”? Crypto assets go through a bull and bear cycle every four years, according to the so-called super cycle. Bitcoin’s halving every four years provides the most clear support for this notion (the change in selling pressure). It has, admittedly, been in operation three times since 2011.
Attributing it to fate is undeniably sabotaging the work of multiple developers across the crypto sector, and it shouldn’t be.
People used to advocate for bubbles because they could never be falsified. And, if the growth is too rapid, a few thunderstorms are unavoidable, and a new group of individuals who aren’t fans of bubbles will try to mock them (as they are now!). Then it’s time to create and develop gradually.
It interlocks as it goes around and around.
It’s quite similar to super cycle, but it’s not the same thing:
The 2013 Bitcoin bull market introduced the public to blockchain technology, resulting in Ethereum in 2015.
The bull market of 2017 has made everyone aware of the power of smart contracts, which is why we now have DeFi in 2019.
We’ve realized DeFi,NFT after a 21-year bull market.
We are bound to pluck new seeds in the future because so many great things can be developed.
When the market value of UST exceeds the market value of DAI, UST becomes the most popular. Farmers all across the world were clamoring for it at the time.
Although the executives at MakerDAOof believe their own goods are superior, they only get a little irritated on Twitter. Luna’s ardent supporters have reacted negatively to this.
1. Liquidity issues
Several colossal crypto market makers, who were once crucial keepers of crypto market liquidity, have been severely harmed.
Whether it was investing in Luna, giving money to Luna, providing liquidity to UST, or being a UST farmer (except ETH to borrow UST), they all experienced significant losses.
The crystals in the hometown are virtually depleted, and no one is going to guard the outer tower, much like in the game. You can easily see that after Luna’s demise, the entire Crypto market’s liquidity has deteriorated significantly.
2. Being compelled to sell
Top institutions, such as Celsius and 3AC, have built a strong reputation and reputation through time, and they also have a lot of liabilities (whether from LPs, friends, or consumers), which is typical of a business expanding. In terms of their size, if liquidity is normal, progressively repaying the money should be no problem.
Both sides, I suppose, were ecstatic when they received the money.
The happy moments, on the other hand, do not last forever.
During the current rate hike cycle, cryptocurrencies are continuing to fall. These institutions are left with fewer options as collateral declines. One of the few possibilities is to sell your remaining chips to avoid a loss. And today’s shaky disk can’t handle such a significant drop in value.
This is also a cycle of death. The more urgent it is to sell to repay the loan/make up the margin, the more severe the decrease will be, and the debt repayment will be more urgent.
3. A fresh wave of regulations is in the works.
It’s hard to believe that regulation won’t catch up with the complaints from Celsius retail investors and the blood and tears of Luna investors.
Crypto is unable to consider ending his relationship with Luna at this time. Because no subdivisions will be made by the general population in the outer world. The examples of Luna and Celsius were brought up when the supervision needed materials, and even 3AC, a wave of forceful supervision against Crypto, was perfectly predictable.
In any event, the supporters of Luna, who were thronging the streets at the time, are now BTC.
The avalanche’s snowflakes are not innocent. The heavier the shackles that will be traded in the future, the louder the rhetoric at the time.
Many organizations believed Luna was “too big to fail” during its peak. A thousand times told, a falsehood becomes the truth. I genuinely hope that no one promotes Ponzi schemes, believes in “too big to fail,” or believes in “taking a moment for granted.”
