Crypto Investment Update – UST Depeg Saga

This Opinion post first appeared in my blog here: https://pwlcm.wordpress.com/2022/05/13/crypto-investment-update-ust-depeg-saga/

By now, everyone would have known about the UST Stablecoin Depeg Saga and the chaos it has caused to Terra LUNA and the crypto market at large. CoinDesk published an explainer article on the saga:

The LUNA and UST Crash Explained in 5 Charts

The Terraform Labs said in a tweet that they have decided to halt the Terra blockchain to prevent governance attacks following severe Luna inflation and a significantly reduced cost of attack. They resumed activity less than 2 hours later after applying code patches to the blockchain.

Unstablecoin: Terra halted its blockchain as UST tumbles toward $0

Tokenize Exchange Responses

This morning (13 May 2022 11am SGT), Tokenize Exchange sent a Special Notice on the suspension of Luna withdrawal:

This evening (13 May 2022 7pm SGT), Tokenize Exchange sent an update on LUNA and UST, announcing the withdrawal of deposits under Crypto Earn with pro-rated earned yield:

Performance Update

Here is a snapshot of the 4 coins in my portfolio as of this morning (13 May 2022):

LUNA closed below USD0.01 yesterday, that is more than -99% drop from its All Time High (ATH) of USD119.44. The other 3 coins suffered varying degrees of price drops.

I have updated my crypto portfolio performance based on yesterday closing prices from Tokenize Exchange, which quoted LUNA price at $0:

My LUNA holdings still shows positive returns because I had taken partial profits in December 2021 (refer to Crypto Investment Update – December 2021) and recouped my capital invested in LUNA. With its price quoted at $0, my holdings in LUNA is now 0% allocation to my overall investment portfolio.

The allocation to my cash balance in Tokenize Exchange has also dropped to almost 0% because I actually bought some LUNA coins yesterday. This is purely a speculative move without any real justification as there is no telling whether LUNA can survive this saga. It is a bet on LUNA either go bust or recover some, and I am not too concern because the bet was small dollar amount.

My crypto portfolio is now 3.22% allocation of my overall investment portfolio, almost half from the end April allocation of 6.01%. The portfolio returns has now gone into negative territory.

Lessons Learnt

1. It is a good thing that I have adopted a portfolio investment mindset in the beginning (refer to My Speculative Crypto Investment Journey), treating crypto as the aggressive end of the barbell strategy, keeping my investment within 5% of my overall investment portfolio allocation and diversifying risk into multiple coins. This allows me the tenacity to withstand this onslaught of potential crypto meltdown.
2. On hindsight, I could have taken more profits from LUNA and withdrew all the capital I pumped into this crypto portfolio, leaving the remaining portfolio completely risk-free.

3. I was doing monthly review on my crypto portfolio. I could have taken action, perhaps exiting half of my crypto holdings, when there were signs of bearishness (e.g. break down from Ichimoku Cloud).

Referral Links

Tokenize Exchange: https://tokenize.exchange/topic/invited/?invite_code=Vn58M