Crypto Briefing 5/13/22 - The Forecast

Crypto Briefing 5/13/22

Crypto Briefing 5/13/22

In one of the most turbulent weeks in crypto’s history, the stablecoin UST depegged from the dollar as significant selling in both Bitcoin and UST’s sister coin, LUNA, pulled UST down from its theoretically permanent $1 peg.  UST effectively operates through a system of algorithms which trade its sister coin, LUNA, alongside a host of other cryptocurrencies to maintain a UST value of $1 at all times, making it a ‘stablecoin.’  When this $1 peg slipped as a result of selling in Bitcoin and LUNA, the team at Terra issued more LUNA tokens as a way to buoy the price of UST. However, their attempt to do this was unsuccessful and investors saw the price of Luna drop from $80 to fractions of a penny.  Meanwhile, the supposed ‘stablecoin’ UST is trading beneath 20 cents.  This failure proved to be systemic as the entire crypto market witnessed a dramatic risk-off event in a cascade of selling resulting from the implosion of UST and LUNA.  Coins such as Bitcoin and Ethereum broke through multi-year support and produced a major capitulative event. With that being said, the worst of this correction is definitively over and we should now see a decisive move up into mid-July.  Events like these and the inherent volatility which accompanies cryptocurrencies are why we do not directly alert trades, but accumulate for the great reward at the end of this road – a road hardly far off at that.

There will be major fallout from this event in crypto and it could be the catalyst necessary to yield proper regulation in the industry.  Treasury Secretary Janet Yellen is slated to issue a report on stablecoins in the coming months. Additionally, this event could prompt members of Congress to write legislation on crypto, which will be an immense benefit to the space in the long term.  Trillions of dollars in capital are waiting on just regulatory clarity to be deployed.  While seemingly paradoxical, proper regulation will likely be one of the biggest catalysts in crypto’s history.  We again must remember that investing in crypto is a marathon – not a race. Many investors who were involved with cryptocurrencies during 2017 and 2018 suffered similar drawdowns, but by not capitulating, they were able to create generational wealth. With the entire market on sale, now is a terrific time to continue accumulating.  Some of the most undervalued altcoins on the market right now are CSPR, HBAR, XLM, SOLO, and XRP.  These are our favorites in terms of utility and present value.  The TerraLuna debacle is a chilling reminder that not all altcoins are created equally, and many will not survive the long haul.  LUNA was one of the first high profile coins to completely fail, and there will certainly be more in the future.  The coins in our model portfolio have been vetted by us as honest, legitimate, utility-based projects which have the potential for an extremely bright future (while nothing is guaranteed of course, these coins present in our opinion the highest risk/reward in crypto).  LUNA was a top 10 coin, and we hope to continue helping our members avoid projects like this while still reaping all the benefit crypto has to offer.