The global cryptocurrency market saw its value plummet amid heavy sell-offs, with the collapse of TerraUSD (UST), one of the biggest stablecoins, sending shockwaves throughout the digital asset market.
The stablecoin UST slipped past its intended US$1 peg to near $0.03 last week after being attacked by a group of investors known as a "whale", which is a large group aiming to find loopholes in algorithms and take advantage of them, said Pipat Luengnaruemitchai, chief economist at KKP Research, a research house under Kiatnakin Phatra Financial Group (KKP).
According to Coingecko.com, UST was at $0.099234, down 25.4% over the past 24 hours as of 2.20pm on Tuesday, while Bitcoin was still hovering at $30,494 as of 2.57pm.
Recently Do Kwon, co-founder of UST and Luna, announced a salvage plan on Twitter to split the blockchain into Terra and Terra Classic by the end of May. However, the announcement failed to convince investors thus far.
Mr Pipat said the price collapse triggered a crisis of faith in the assets and led to many investors offloading their crypto and digital coins in a panic.
The biggest cryptocurrencies such as Bitcoin, Ethereum, Cardano and Solana were reportedly down 30-50%, while many mid- and small-cap altcoins were down 70-90%.
He said the collapse of UST caused a ripple effect across the market because stablecoins' market size is huge, estimated at over $180 billion, nearly 10% of the total crypto market cap.
Following the incident, the Securities and Exchange Commission (SEC) released a survey on Tuesday examining local investors' perspectives towards investment in digital assets.
According to the survey, 46% of investors see investment in digital assets as speculative trading.
The number of trading accounts on digital asset exchanges in Thailand grew more than 10 times from 2020 in February 2022, up from 170,000 accounts to 2.5 million accounts.
Pongsathon Parinyavuttichai, in the SEC's research department, said some Thai investors choose to deposit their money in decentralised finance (DeFi) because they thought bank deposits are not always safe and provide very low interest rates compared with DeFi.
However, he said most investors are not very knowledgeable about digital assets and often decide to invest in them because of advice from friends, influencers, YouTubers or celebrities.
Mr Pongsathon said the older generations are less interested in digital assets because they see them as high risk, while younger investors are easily attracted to the assets because they see a chance to gain high returns and have more risk tolerance.
Although the Thai digital asset market has seen considerable growth in the past year, according to the SEC data, most Thai investors still opt for traditional stocks.
Among the factors that contributed to the increased investment in digital assets over the past year were the mass adoption of Bitcoin as well as its rising price, he said.
Mr Pongsathon said local digital asset exchanges have played a huge role in changing people's perspective towards digital assets.