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- On Twitter, Mike Novogratz, Founder, and CEO, of Galaxy Digital (GLXY.TO), shared his views about UST and LUNA meltdown via a public letter linked to the tweet.
- Due to the macro backdrop, the reserves held to back UST and LUNA are now under pressure. The 18% yield offered in the Anchor protocol led to the explosion in UST’s growth.
- At last, Novogratz said those expecting the “V” bottom in the market are likely to be highly disappointed.
Founder and CEO, of Galaxy Digital (GLXY.TO), Mike Novogratz finally broke his silence on UST and LUNA meltdown, through a public letter posted on Twitter, on Wednesday.
Back on Twitter after 10 days, Novogratz says “After much thought,” it’s finally time to talk about last week’s massacre and the coming weeks, more importantly.
In a longer letter linked to the tweet, Novogratz recalling the last week says that it was a “brutal macro backdrop” for all risk assets in 2022, with flagship currencies such as Bitcoin and Ethereum down by 60%, altcoins lower by an average of 80% from ATH and 50%-70% decline in any number of growth stocks.
Monetary spigots who are responsible for a massive liquidity bubble, are being turned off by the central banks, Mike added.
The reserves held to back UST and LUNA are now under pressure due to the macro backdrop.
The 18% yield offered in the Anchor protocol led to the massive growth of UST. It also affected the other uses of the Terra blockchain. The UST withdrawals along with downward pressure on reserve assets prompted a stress scenario similar to a ‘run on the bank.'”
The need for taking profits along the way among other things is reinforced due to the massive Terra crash and UST said Novogratz. He also added that Galaxy did exactly what had been proposed in a filling, earlier this month.
Novogratz, although highly bullish on the crypto outlook, said those expecting the “V” bottom in the market will be highly disappointed.
Further explaining, he added, it will go through a redemption cycle, restructuring, consolidation, and renewed confidence in crypto. We just witnessed one of the crypto moves in cycles, concluded the CEO.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
