But, unlike other stablecoins, terra was not pegged to a stable reserve asset such as gold or the dollar. Instead, its stability was based on algorithms tied to its sister cryptocurrency, luna. Their collapse sparked panic in the market. Although the market has stabilised somewhat since the end of May, the valuations of many cryptocurrencies remain notably dented. Some key financial institutions, such as the International Monetary Fund , have cited the latest crash as proof — if any more were needed — of the inherent instability of this asset class.
Individual traders bear the brunt There is an argument that the situation was far worse for individual traders than it was for large-scale investors. Aidan Mott, intel manager at crypto research provider Messari, agrees with this view, noting that such volatility has often resulted in a vigorous rebound for some currencies, particularly bitcoin and ether. The biggest volatility for bitcoin and ether has resulted in price increases, which is good for institutional traders.
If you have an asset with zero volatility, there is no opportunity to make a profit. Consistency and quantifiability are at the heart of any successful approach. But, given the instability that comes with the territory, what can traders do to maximise their chances of making solid gains over the long term? The general idea runs along similar lines to the standard approach to allocating money during tougher times: focus on attracting yield and concentrate on cash-flow-positive names.
You will see the strength of bitcoin relative to the rest of the alt sphere. Hindi expects this trend to continue, with more institutional investors using their expertise in risk management to profit from the instability of crypto markets.
The shakeout is also showing what's "complete nonsense versus what actually has the potential to continue to either be a store of value or an asset that's worth something," said Douglas Boneparth, CFP and president of Bone Fide Wealth in New York. He added that while the drawdown has been brutal, it's not the first time bitcoin investors have weathered such a storm. Young venture investments have wonderful upside, but they come with a lot a volatility. He also noted that investors buying into crypto now should think of it similarly to venture-backed investing in terms of risk and potential reward.
Basically, this means you could sell your bitcoin and immediately buy it back at a lower price, which could set you up for larger future gains.

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