Why is crypto dropping? A quick perspective forward!
I feel it’s important to provide some commentary in the bad and the good times.
Firstly, as context. We are in a ‘tech-risk averse’ market presently. We have gone from 680 to 175 for the price of Netflix over the past 6 months, so -75% or so in a well known tech brand, due to a re-pricing of expectations.
There are many other examples, including the broad NASDAQ.
What we have seen in the past few days are few distinct effects:
(i) Firstly, the unwinding of a financial engineering product, called UST, a stablecoin that promised to be linked to the USD. It was systematically attacked, and forced to abandon it’s peg by predatory elements in capital markets.
It was deliberate and co-ordinated attack. That’s fine, the last time this happened was in the 1980s (thank you Soros). However, it does happen all the time.
(ii) Secondly, the ‘animal spirits’ of risk and panic have spread to many other (unrelated) projects. Solana, Algorand, Avalanche to name a few, are all protocols that have taken a hit, but their fundaments remain intact. They have nothing to do with the underlying dynamics of UST.
If you are investing based on the technology and the fundamentals, it’s a good moment to reflect if your underlying belief that these are the technologies of the future. It’s a great moment to build and invest for the long-term.
Written by Dr. Michael G. Kollo
Michael is the CEO of Clanz and has deep background in top tier investment management, Applied AI modelling, fintech’s and SaaS. With a sprinkle of academic teaching and research experience, mentoring startups and the persistent thought leadership for clients and the business community at large.