It's a question of trust really, the same as with fiat currencies.
Right now, the trust is gone, more so for crypto than for fiat but to some significant extent with fiat too.
I don't think it was all doomed to failure. There are flaws in the system(s) but it wasn't inevitable that those would lead to the catastrophic failure that we saw and see. It took a series of unfortunate events and if those hadn't happened it could have worked out much differently. But it didn't.
If it's all a ponzi scam rug pull then it shouldn't recover but just as I don't think it was inevitable that it would collapse I don't think a recovery is impossible either. Only time will tell but there is no fate except what we make for ourselves.
As for Terra Luna, it looks like it was just a bank run. Some of the whales like at Celsius pulled out, and the collateral to help support UST was in bitcoin and that was falling at the same time, and then supposedly the peg still could have been maintained but the 2.7 billion in bitcoin collateral wasn't used early enough when it could have made a difference. It wasn't like there was no collateral behind it though. There just wasn't enough for the level of black swan it experienced and it may have been a victim of its own success, getting too big for its britches, diseconomies of scale or something. What may have worked with a market cap of 6 billion didn't work at 18 billion or whatever the numbers were.
When you look at our own banking and monetary system, and go behind the curtain, you see some things that don't inspire a lot of confidence either with some people saying the same thing about fractional reserve banking being another type of Ponzi scheme and our government minting currency, trillions of dollars out of thin air the way Luna was minting trillions of coins out of nothing. And then you factor in the even worse monetary policies of a lot of other countries like with Venezuela's hyperinflation and crypto doesn't seem like it's necessarily the worst Ponzi scheme out there anymore. If you're in Venezuela and you bought bitcoin at the high you're still probably better off now than if you'd kept your money in bolivars.
Luna oddly enough is down, way down, and I mean way, way down. But not out. For the moment it's holding up a little bit better during this crash than some others, down to 2.6 or so. This is the new Luna 2.0. Again, we just have to wait and see what happens. I doubt it'll even get back up where it was but there's a small chance in a few years it could see some recovery. Of course, it could go to zero again and there are people joking about how if that happens there will be a Luna 3.0, all for the whales to get a chance at new bag holders.