Terra LUNA Crash Vindicates Country’s Ban on Crypto-Related Activities – Featured Bitcoin News

An op-ed article published in the state-backed Chinese publication Economic Daily, has suggested that the recent crash of the Terra blockchain’s LUNA and the de-pegging of the UST stablecoin vindicate the Asian country’s decision to ban crypto-related activities. According to the author, market crashes were caused by interest rate rises at the U.S. Federal Reserve as well as by various investment giants buying and selling crypto assets.

Remarkable Impact on the US Interest Rate Rise

An author writing for China’s state-backed publication, Economic Daily, has argued that the recent crash of Terra’s LUNA and the de-pegging of the UST stablecoin vindicates his country’s decision to block or prohibit virtual currency-related activities. The author, Li Hualin, also claimed that China’s “decisive” and “timely” action helped to “extinguish the ‘virtual fire’ of virtual currency speculation and put ‘protection locks’ on investors’ wallets.”

As reported by Bitcoin.com News, Terra blockchain’s native token LUNA’s troubles started after the network’s other project, the algorithmic stablecoin UST, lost its peg against the U.S. dollar. Initial efforts to rescue the stablecoin precipitated the native token’s plunge from a price of over $87 on May 4, 2022, to a current price of just under $0.0003.

While some crypto experts have placed the blame for the token’s crash on the actions of the project’s leader, Do Kwon, in the opinion piece, the Chinese author appears to attribute the token’s fall mainly to the raising of interest rates by the U.S. Federal Reserve. The author explained how rate increases caused the token’s fall in this article:

The Federal Reserve launched an interest rate increase cycle at the start of the year. Global liquidity has increased. The Federal Reserve increased interest rates 50 basis points each at one time in May. This had an adverse impact on market sentiment and capital. Virtual currencies suffered the most.

Virtual Currency and Chinese Law

Many in crypto are trying to understand the cause of the collapse following the fall of Terra tokens. However, others have already accused two firms, Blackrock and Citadel, of being behind LUNA’s woes. The firms have rejected these allegations.

The Chinese author, in the meantime, claims in the piece that the involvement of investment giants in crypto markets “can lead to violent fluctuations in currency values, triggering a large number of sell-offs.”

Hualin stated that Chinese law doesn’t protect virtual currency transactions. These comments appear to contradict the recent Shanghai High People’s Court judgment affirming bitcoin to be a virtual asset protected by Chinese law.

The author ends the article by urging investors to “remain rational, promptly eliminate the greed of bottom-hunting and get rich overnight, and stay away from related trading speculations, otherwise it is very likely that ‘currency will go to the fortune.’”

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Terence Zimwara

Terence Zimwara, a Zimbabwean journalist, writer and author who has been awarded the Zimbabwe Booker Prize. He is a prolific writer on the economic woes of African countries, as well as digital currencies that can be used to provide an escape path for Africans.