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On May 18, billionaire investor and cryptocurrency advocate Mike Novogratz published a post about the recent fall of the Terra blockchain that Novogratz and his company Galaxy Digital really believe in the Terra project, so much so that the investor got a tattoo of LUNA on his arm. Despite recent events and the losses that the crypto-economy has suffered over the past week, Novogratz stressed that he still firmly believes that “the cryptorevolution is here and now.”
Novogratz reflected on Terra’s demise, “It’s time to talk about the last week.”
Most recently, Bitcoin.com News reported on the collapse of LUNA and UST and the big backers who invested in Terraform Labs. One of the investors mentioned in our report was billionaire investor and cryptocurrency advocate Mike Novogratz. For quite some time, Novogratz and his company Galaxy Digital have had a lot of faith in the Terra ecosystem, as reported by Bloombergon January 26, 2021Novogratz and investors called the Terra blockchain project one of the “canaries in the coal mine of what else could happen.”
Novogratz also got a LUNA-themed tattoo, a LUNA-themed tattooand said he was “officially Lunatic.” After the UST dispatch incident and the erasure of the entire Terra ecosystem, Novogratz is not as talkative as usual on Twitter: On Wednesday, May 18, Novogratz tweetedfor the first time since May 8, 2022. After much thought, Novogratz said: “It’s time to talk about the last week and, more importantly, the weeks ahead. In addition to the tweet, Novogratz also left a link to a blog post discussing the Terra fiasco at length.
“There is no good news in what happened to the market and the Terra ecosystem.” The investor detailed it on his blog.” Luna and UST alone wiped out $40 billion in market value in a very short time. Profits and wealth disappeared for both large and small investors. The collapse undermined confidence in cryptocurrencies and [decentralized finance]. Every time money is suddenly lost in this way, people want answers. I will try to add some thoughts to the ongoing debate.”
Novogratz then talked about Galaxy’s major investment in LUNA, which will begin in Q4 2020, and how the team considers the project “a top-five financial app in South Korea with more than 1.8 million users and great growth potential.” He explained that he realized that Galaxy was “intrigued” by the Terra ecosystem and considered it “an example of how cryptocurrency finds real use.” The investor then noted that the global macroeconomic backdrop has had a negative impact on many risk assets this year, and he believes that “the macroeconomic backdrop has put pressure on the reserves held to support Luna and UST.”
Novogratz added that
UST growth exploded from the 18% yield offered by the Anchor protocol and ultimately exceeded other Terra blockchain options; downward pressure on reserve assets combined with UST withdrawals created a stress scenario similar to “bank lending.” worked. The reserves were insufficient to prevent a UST collapse.
Novogratz emphasizes “basic investing principles”-the Galaxy founder says that “inexperienced market participants should risk only what they can afford to lose.”
Novogratz said the LUNA and UST cases shed light on basic investing principles such as diversification, taking profits as you go, managing risk and understanding investments within a macroeconomic framework. The billionaire investor said Galaxy Digital followed these basic principles when investing in LUNA.
“It’s heartbreaking to read about individual investors who have lost their savings because of one investment,” Novogratz explains on his blog.” A basic tenet of the cryptocurrency belief system is equal access to the market. However, it is important that inexperienced market participants take only the risks they are comfortable losing. I have often said that people should allocate 1% to 5% of their assets to this direction.”
In conclusion, the founder of Galaxy Digital noted that he still firmly believes in the cryptocurrency space, but this does not mean that the bottom is passed and the market will go straight up after that. Going forward, the crypto space needs a realignment, a cycle of redemption, consolidation and renewed faith. Cryptocurrencies move in cycles, and we just witnessed a big cycle,” Novogratz added.
What do you think of Mike Novogratz’s faith in Terra and the reflective blog post he wrote about last week’s LUNA and UST fiasco. Let us know what you think about it in the comments section below.
Image credits: Shutterstock, Pixabay, Wiki Commons
