Senior Bloomberg analyst Mike McGlone says algorithmic stablecoins relying on market growth may be done for the foreseeable future.
In a new interview with Cointelegraph, the commodities strategist says that the recent collapse of Terra (LUNA) and its stablecoin TerraUSD (UST) taught the crypto community a lesson on the dangers of algorithmic stablecoins and helped rid the market of surplus digital assets.
“One thing that’s notable here is [that] this is part of the ebbing tide of risk assets… when the tide goes out, you see who’s wearing clothes, and we found out algorithmic stablecoins that are based on a market that needs to go up weren’t the best idea…
It’s very unfortunate what happened to TerraUSD, but the bottom line is this is what we’ve been expecting and hoping for to get past this year. You needed to purge the excesses of ‘20 and ‘21 in crypto.”
McGlone says that the market flush will allow the crypto community to once again focus on transforming the finance industry by utilizing digital assets.
“I mean the Shiba Inus, the Dogecoins, the 19,000 [crypto assets] are just ridiculous. [We need] to get back to really building the foundation – what’s happening with the transformation of technology and markets through cryptos.”
McGlone goes on to say that while the markets may be done with algorithmic stablecoins in the near future, they may have a place down the line once they fix the underlying issues associated with them.
“For now, at least in the short term, [they’re done], but they’ll come up with a better way.”
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