An op-ed article revealed within the state-backed Chinese publication Economic Daily, has instructed that the recent crash of the Terra blockchain’s Roman deity and therefore the de-pegging of the UST stablecoin vindicate the Asian country’s call to ban crypto-related activities. Within the article, the author names the charge per unit hikes by the U.S. Federal Reserve and therefore the shopping for and trading of crypto assets by many investment giants as the causes of the recent market crash.
Impact of Recent US Interest rate Hike
An author writing for China’s state-backed publication, Economic Daily, has argued that the recent crash of Terra’s Roman deity and therefore the de-pegging of the UST stablecoin vindicates his country’s call to dam or veto virtual currency-related activities. The author, Li Hualin, additionally claimed that China’s “decisive” and “timely” action helped to “extinguish the ‘virtual fire’ of virtual currency speculation and place ‘protection locks’ on investors’ wallets.”
As reportable by Bitcoin.com News, Terra blockchain’s native token LUNA’s troubles started when the network’s alternative 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 worth of over $87 on could four, 2022, to a current worth of slightly below $0.0003.
While some crypto specialists have placed the blame for the token’s crash on the actions of the project’s leader, Do Kwon, within the opinion piece, the Chinese author seems to attribute the token’s fall in the main to the raising of interest rates by the U.S. Federal Reserve. Explaining however the speed rise caused the token to plummet, the author wrote:
Since the start of this year, the Federal Reserve has launched a charge per unit hike cycle, and world liquidity has tightened. Particularly in early times, the Federal Reserve raised interest rates by fifty basis points at a time, which had a negative impact on capital and market sentiment, and virtual currencies were the primary grips of forcefulness.
Virtual Currency and the Chinese Law
Following the crash of the 2 Terra tokens, some inside the crypto community are still making an attempt to piece together what could have caused the spectacular collapse. However, others have already suspected 2 companies, Blackrock and Bastion, of being behind LUNA’s woes. These allegations are rejected by the companies.
The Chinese author, meanwhile, claims within the piece that the involvement of investment giants in crypto markets “can cause violent fluctuations in currency values, triggering an outsized variety of sell-offs.”
Hualin additionally reiterated that virtual currency transactions don’t seem to be protected by Chinese law. These comments seem to contradict the recent Shanghai High People’s Court judgment affirming bitcoin to be a virtual quality protected by Chinese law.
The author ends the article by urging investors to “remain rational, promptly eliminate the greed of bottom-hunting and acquire made nightlong, and stand back from connected mercantilism speculations, otherwise it’s terribly seemingly that ‘currency can head to the fortune.’”
The post China Backed Publication: Terra Luna Crash Vindicates Country’s Ban on Crypto-Related Activities first appeared on BTC Wires.