Crypto investor Michael Novogratz has broken his silence about the collapse of the Terra ecosystem, saying in a letter on Wednesday that he was confident in the industry over the long term. Novogratz’s investment firm Galaxy Digital invested in luna, the sister coin of TerraUSD, also known UST, in the fourth quarter of 2020 using capital on its balance sheet, Novogratz wrote in a letter on Wednesday. The firm revealed in an update to investors last week that it had lost $300 million since the end of March. The two coins were part of an algorithmic trading mechanism designed to keep the value of UST stable at $1. Earlier this month, UST fell below that peg, and in turn the price of luna dropped to effectively zero . “What’s important to understand about Terra/Luna is that the mechanism that was intended to keep UST stable was public, transparent, and hotly debated in many forums,” Novogratz wrote. “UST was an attempt at creating an algorithmic stable coin that would live in a digital world. It was a big idea that failed.” The Galaxy Digital CEO was a public backer of the Terra ecosystem, including getting a tattoo on his arm with the word “Luna” accompanying drawings of a wolf and moon. However, he had been largely silent on Twitter and had not made media appearances since the collapse began before Wednesday’s letter. “My tattoo will be a constant reminder that venture investing requires humility,” Novogratz wrote. Novogratz pointed to tightening monetary conditions from the Federal Reserve and the general weakness in risk assets, such as tech stocks and bitcoin, as a trigger for the dramatic collapse in UST and luna. The investor wrote that he was still confident in crypto long-term, pointing to the flow of human talent into the industry and the potential of the metaverse, but he said the industry was now in a reset period. “This does not mean the crypto market will bottom and head straight back up. It will take restructuring, a redemption cycle, consolidation, and renewed confidence in crypto. Crypto moves in cycles, and we just witnessed a big one,” Novogratz wrote. The major drop for crypto overall has erased hundreds of billions of dollars of paper value for investors in just a few weeks, including some small-dollar retail investors who have posted about their trades on social media. Novogratz said these stories were “heart-wrenching” and that investors should only allocate between 1% and 5% of their assets to crypto due to its volatility. Novogratz also shared advice on how investors should protect themselves from being wiped out in future drawdowns. “The flash-crash of LUNA/UST also reinforces a few core tenets of investing (especially crypto investing): 1. keep a diversified portfolio, 2. take profits along the way, 3. have a risk management framework, and 4. understand that all investments happen in a macro framework,” he wrote.