Technology

This is how a trader experienced the fall of Terra USD, losing up to 70% of his investment

ImmortalCrypto, as it is known on social networks, has been trading cryptocurrencies for more than 4 years. And at least since 2020, he does it full time, as his main activity. That transition, from a job outside of trading to this full-time job, was made after he became a consistently profitable trader.

He himself told CriptoNoticias in direct contact with his story, which dates back to the bear market during 2018. At that time, with bitcoin hovering around $6,000, he began trading. He lost a lot, but he also managed to win. Now, looking back in time, he says he is glad to have entered the bear market. It’s better this way, he alleges.

In this world, we might think that such experience is enough not to incur too great a loss. And in part, that is true. Nevertheless, he was one of thousands of people who lost money in the Terra project debacle. Although he did not invest in the LUNA token, he did have tens of thousands of dollars in his stablecoinTerraUSD (UST).

Via Twitter, he commented that he had lost 70% of the capital he had in USTfollowing the loss of 1:1 parity between this currency and the US dollar. A parity that, in theory, should not lose. After all, it is a “stable” currency. But the reality has been different.

As we have continuously reported in CriptoNoticias during this week, the history of the Terra project, its stablecoinits token and its reserves in bitcoin has ended in the worst possible way: with billions of dollars in losses and a lot of people affected with devastating results. The case of ImmortalCrypto was not one of the worst. As he himself alleges, this has been thanks to the experience and the forecasts that he had taken.

ImmortalCrypto was among those affected by the Terra debacle. Source: @inmortalcrypto/Twitter.

An offer that turned out to be too good to be true

But… how did the Spanish trader experience it? And even more: why did he enter the Terra ecosystem? He did it looking for greater profitability, basically. He did not get into LUNA, the Terra token that had been appreciating at a tremendous rate this year, before this week’s debacle. But he did get into UST with a capital that, although it was not so heavy in his portfolio, it is not minimal either.

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It all started at the beginning of this year, when he decided to divert to the stake “much of the money in stables that he had.” It is an activity through which a user acquires and locks a certain number of tokens in exchange for rewards. In the case of UST, that reward was a 20% annual return.

He says that he learned a lot about the process, spoke with fellow traders, “quite influential people in crypto twitter«. They warned him about the risks of having all the capital in a single stablecoin and, ultimately, he decided to divide the staking portfolio into three parts.: one in UST, one for Tether (USDT) and the other destined for USDC or Circle’s USD Coin, with which he opted for rewards between 8% and 12%.

The problem is that the currency began to lose its anchor to the dollar little by little. He thought about leaving but UST momentarily regained parity and said “I’m staying”. But everything got worse. The next day UST was already worth $0.7. He decided to exit staking at that time, already at a 30% loss. Something that wouldn’t bother him in trading, he says, but considering it was in a “stable” currency, he changes perspective.

The problem is that it couldn’t come out that easy:

…but the exchanges take about 48 hours to return the amount to you. In those 48 hours the fear you have passed: a death spiral. It fell to $0.30, I woke up that day and the first thing I looked at was UST. It was at $0.30 and LUNA at $1. At that time I already had staking unlocked, so I had the option to take it out with a 70% loss or risk losing the rest. Seeing what was happening, it was very unlikely that the 1:1 would return. I decided to take out at 70% loss. I had approximately USD 50,000 in UST. 70% are pretty big numbers. It’s not something that stops me from moving. I expected that some could fall, there could be a problem. It bothers me a lot because it put me in a difficult situation, which is making a decision whether to sell your stable at $0.30, something that shouldn’t happen under any circumstances in crypto.

ImmortalCrypto, cryptocurrency trader.

This Friday, May 13, the Terra stablecoin is not worth 20 cents on the dollar. Source: CoinMarketCap.

A debacle difficult to predict (despite certain warnings)

ImmortalCrypto was aware that there were risks when entering Terra USD. Not only because, as he reiterates, every investment carries a risk. Rather because in this particular case there were some red flags, as he himself catalogs them. “Especially when a stable gives you such a high return, it is already the first red flag. The first problem », he says.

To that is added the fact that it did not have as much travel as other stablecoins From the market. Especially compared to Tether, which “has been through some really bad news, through a bear market, and held up very well. So he gives much more confidence going in there than in UST ».

If you are going to stake stables or have stables, take into account that there are risks. It shouldn’t be that way, but they all carry risks. And more if you are going to stake it. If you want to remove it you will have to wait as long as it is depending on where you are doing it. But hey, LUNA in general did have its red flags. I think there were warnings but something like what has happened… I don’t think that something so strong could not have been foreseen.

ImmortalCrypto, full time trader.

On a hypothetical recovery, the trader considers that there is a lot of debate, but that those in charge of the project started quite badly. Especially with the sale of your reserves in bitcoin (BTC). More than 40,000 according to his own statements.

This, he says, rather than being seen as a recovery attempt, sent a very negative message. It caused more fear than there was already among investors, he adds. “I personally do not think there are possibilities,” says the specialist.

Confidence crisis for cryptocurrencies?

Does ImmortalCrypto believe that the Terra effect is detrimental to the cryptocurrency ecosystem? His response is very direct: “This is definitely having a very bad impact in general […] for a stable to lose its value is a horrible thing because people no longer feel safe. Obviously there are other stable ones but this makes you lose a lot of confidence, both for people inside ‘crypto’ and for people outside.

In fact, the Terra debacle did have a visible impact on the market. Bitcoin and the rest of the main cryptocurrencies, which had already been falling in recent weeks, hit bottoms not seen since last year. And that coincided with the fall of LUNA and UST.

As this article is being written, however, the market appears to have recovered from that scare. Bitcoin has touched $30,000 again, although it has not finished consolidating on that mark, and other currencies show green numbers on the day of this Friday, May 13. But ImmortalCrypto believes that this story does not end here:

The distrust that this has generated, what it will also generate is that many regulators put the magnifying glass over the stable ones. Which is quite negative because it means huge regulations for ‘crypto’, which we always know is not a positive thing. These are things that go way out of line..

ImmortalCrypto, trader focused on bitcoin and cryptocurrencies.

On the positive side, his position is that despite this debacle, other stablecoins will not be affected in the long term. USDT momentarily lost its parity with the dollar recentlyalthough its drop to $0.95 does not seem representative, when compared to UST.

I don’t think that contagion can happen in either USDT or USDC. They are some of the most reliable stablecoins out there. And more Tether that has been through some pretty bad stuff and has always held up. For my part, I still have a lot of money in stables and I have no doubts. It may affect what happened today, but I think there is no possibility of contagion.

The ImmortalCrypto Trader.

Immortal will live another day despite this loss. Source: @inmortalcrypto/Twitter.

Teaching: “the most important thing that has happened”

ImmortalCrypto considers that what happened with Terra and her stablecoin leaves a very important lesson. Especially, for those who are new to the world of trading, investments and cryptocurrencies. As advice and final reflection, we prefer to reproduce his closing words in full:

This is ultimately the most important thing that has happened. This is something that does not usually happen, but it definitely teaches people who are new arrivals, because people who have more time are aware of this. I have seen altcoins at -95%. I have seen markets with brutal capitulations. We have seen a lot of scams, now stable trading at minus 70%. This teaching that he gives is for people who come and believe that this is simple: ‘I put money in and it is impossible for it to fall’. The teaching is that not even in a stable are you free from risk. The moment you put your money on a site, it doesn’t matter if it’s a coin, if it’s crypto, a stock, a stable, it doesn’t matter. Everything is going to carry a risk. There is no way, and less in a market to make easy money.

About 6 months ago I was talking to a person who was new to crypto. With money. And she told me: ‘I don’t understand why people complain so much about a bear market if it seems practically impossible to lose money in crypto’. And I told him ‘friend, I don’t know when, but you’re going to realize how wrong you are’. And this is the reality of the markets and much more in crypto. Everything involves risk, this is a market, people don’t come here to play. And if you come to play you will meet people who are not playing, who have many millions, who have been playing for many years and know how to do things. I’m not even free, I’ve been locked up in UST with years of experience. Of course: what has the experience allowed me? Split the risk and lose, but don’t lose that much. I mean, I can go on another day. But for people who are new, let them know that if they enter a market they are at risk.

ImmortalCrypto.

We can add that, ultimately, whether you enter a bullish or bearish market, it will always be something risky. The markets do not go up forever, although there are those who expect that from bitcoin and cryptocurrencies. Bear cycles are as long as bull cycles. And you have to know how to get through them.

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