A Kyiv resident wanted to protect his savings to avoid the dangers of the Russian war, according to The Guardian.
He put $10,500 into terra, a “fixed” crypto token whose value later crashed.
The Ukrainian account is one of many stories of retail investors being burned by the cryptocurrency crash.
Yuri Popovich thought it seemed like a good idea at the time.
Russia was invading Ukraine, Popovich’s homeland. The Kyiv resident wanted to protect his savings of about $10,500 from currency collapse or other war-related risks, Tell The Guardian account published Sunday. It is estimated that the cost of living in Ukraine was around $467 per person in May, according to to Numbeo.
International Monetary Fund sound the alarm In March about how the price of food and oil has risen because of the war. “Rising prices of commodities such as food and energy will lead to increased inflation, which in turn will erode the value of income and affect demand,” the organization wrote in a blog post.
Popovich thinks that the cryptocurrency market seems to be on its way to a higher level, so why not turn his savings into these digital tokens to store their value?
According to the Guardian, the Kyiv resident’s answer was a form of cryptocurrency called “stablecoin”, according to The Guardian. theoretically, stablecoins Backed by fiat currency and hard assets, including government bonds or gold. This is supposed to prevent Tokens from becoming very volatile.
“It was impossible and unsafe to store money in the form of banknotes,” Popovich told the outlet, making stablecoins an attractive option.
Popovich chose a stablecoin called the tera.
But terra is not a typical stablecoin that is directly linked to a fixed asset. Instead, it is an algorithmic stablecoin, which means that it uses algorithms to associate itself with a fiat currency or assets.
Earlier this month, the Terra algorithm lost its peg to the US dollar, and the value of the stablecoin plummeted.
Within a few weeks of Popovich transferring his savings to Terra, the token fell into free fall. In early May, the massive sale of the Terra reduced its value. This prompted anxious investors to throw their holdings off the ground, creating a scenario similar to that of a bank run. By Tuesday, the terra token was only worth about 0.00017 USD.
Experts are still thinking about the cause of Terra’s initial collapse, but some say it was coordinated attack on the token.
After viewing footage from Popovic’s bank account, The Guardian said that the collapse of Tira wiped out most of Popovich’s savings, and his tokens are now worth less than $500.
Describing the amount lost as “huge,” Popovich said he had stopped sleeping and had lost nearly 9 pounds. He told the Guardian: “I often have headaches and anxiety. My wife still doesn’t know anything about this loss. I don’t know how to tell her.”
Insider was unable to independently verify Popovich’s account.
Terra crash has shrunk the global cryptocurrency market cap by $500 billion
Popovich is among thousands of retail investors who have been torched with cryptocurrency in recent weeks. Terra’s freefall exacerbated concerns in the broader cryptocurrency market, which were reeling From rising interest rates and tightening financial conditions.
The global cryptocurrency market cap has lost nearly $500 billion since the start of the Terra disintegration in early May, according to to CoinMarketCap data.
Terra crash prompted at least one Reddit user to Share Phone numbers for suicide prevention helplines around the world.
“Here I would like to emphasize again, do not invest the money you need to survive / to survive in the coming weeks / months or even one year. Do not invest in the hope of getting more next month. This is a very volatile market and no one knows what you are doing,” the user said. It will happen.”
Billionaires were also not spared the collapse. Changpeng Zhao, the wealthy founder of the world’s largest cryptocurrency exchange Binance, joking Last week, it was “poor again” after Binance’s investment in Luna, a sister coin token value tied to Terra, crashed to around $2,200 from $1.6 billion a month ago.
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