The Decentralized Future: Are We Assisting The End Of DeFi?
Is it the end of DeFi? The end of DeFi means that popular crypto projects such as Bitcoin,Ethereum but also stablecoins like LUNA and Tether may never return to their previous staggering heights in price and market cap. Let’s see what recently happened.
What happened last week in the crypto world?
It seems that the DeFi market is not yet ready to allow stablecoins to exist. This week’s most popular topic in crypto was a spike in the price of LUNA, followed by a 90% drop, which resulted in investors taking massive losses and withdrawing their funds. Since this moment, the majority of crypto investors started to adopt a more bearish approach toward these kinds of digital assets.
However, LUNA wasn’t the only token to be subjected to a criminal fall. Also, other important assets like BTC and ETH considered the grandaddies of them all, also had an important decrease in their value.
Which are the reasons behind these sudden changes?
We can’t spot just one cause that brings these crypto value reductions. Anyway, just to name a few, considering the particular historical moment we’re currently living:
- Inflation Surging
- Geopolitical tensions
- US Monetary changes
Recently, the US Federal Reserve decided to raise the interest rates making crypto, as well as stocks, pursue a downfall spiral outputting a significant decrease in the two financial products’ value.
As a consequence of this operation, Bitcoin price dropped below $29000 whereas Ethereum $2000.
The TerraUSD situation
Beyond Bitcoin and Ethereum, also the so-considered the third most important stablecoin in the crypto tokens landscape, LUNA, fell down to its all time low. Whether just a number of weeks ago the token value was around $90, at the moment it dropped down up to just $0.2. This event marked a valuable moment in the DeFi story as LUNA was a particular kind of digital assets: a stablecoin, making its price closely linked to a fiat currency one.
Shortly, the fall of LUNA was due to its split-up with the US Dollar’s peg, the way crypto investors and holders backed the token value related to the US Dollar.
What does the future hold for crypto world?
Similarly with what happens in the crisis term of stocks price crash, the most of people usual switch on their most thrilling and emotional part, wondering if there’s going to be a more thriving period for their stocks, or any other type of digital asset.
Although crypto and stocks are different from each other, the above situation could perfectly match also for them and emphatically for the current situation.
Is the Bitcoin going to inevitably keeping on have its price reduce? Will we see again the TERRA token? How are stablecoins going to be managed despite this scenario?
But, as we know… Only the time will show us a concise and clear answer.
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