Macro Research Back to Terra Firma - Lessons to be | FSMOne SG - Research Highlights

Macro Research

Back to Terra Firma - Lessons to be learnt from the Luna/Terra debacle

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• The recent demise of the Luna/Terra stablecoin pair was only the latest chapter in what has already been a especially difficult 2022 for crypto assets.

• The Luna/Terra debacle has worrying parallels to historical financial crises in traditional financial markets, and we remain cautious amidst the crypto market's reluctance to learn from the mistakes of their predecessors.

• Because of this reluctance, what should have been a black swan event will likely occur again - and with no intrinsic value, there is no support when the panic selling ensues.

• Our stance remains clear: Cryptocurrencies remain a poor investment vehicle, and do not exhibit the quality and value characteristics we like in today's inflationary environment.

• After a difficult 2022 so far, quality and value opportunities with actual fundamentals and cash flows have emerged, and investors should consider buying the dip there instead.

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