Think 1000 times before buying luna again
Are you out of cash?
This might be the best way to deal with the current crisis on the digital currency market, which has cost millions of traders around the world a lot of money and even made some of them think about suicide
In the second week of May 2022, there was a massacre on the currency market. Traders have lost more than 200 billion dollars of their wealth in a single day due to digital. However, there are also people whose overnight millionaire status causes them to become bankrupt or indebted when they wake up the next day, despite the fact that the price of their millionaire status has dropped from more than $100 to nothing.
Everyone was prompted to ask the straightforward question, "What is happening and why?" as a result.
By the way, traders in digital currencies themselves are also asking this question, and many of them are unsure of what's going on or how to respond. This is especially true when we consider the color, the most well-known currency at the moment, which has lost nearly all of its value in a matter of days, as well as TerraUSD, its stable sister, which is no longer stable.
Many people now think that the media and social media are encouraging them to gamble with digital currencies because of all of this.
The triple A company's data show that over 300 million people around the world invest in digital currencies, making it possible for their owners to become wealthy.
If you posed this question to one of the winners of the digital currency competition, he might respond, "I won because I know how to choose the correct currencies, currencies that have a project and a future and such talk," while the person who lost the competition did so because he selected currencies that were either weak or unsuccessful. This discussion appears logical at first glance.
However, if you attempt to contrast it with actual market conditions for digital currencies, it amounts to empty rhetoric. One person loses while the other gains when two people put their money in the same currency, like Bitcoin; How is this possible?
In a nutshell, the timing of entry and exit in the digital currency market has a significant impact on profit and loss. Let's say I paid $22,000 for Bitcoin today. I got another buyer to buy it for $40,000 at the same time, and I knew its price would keep going up in the coming days. However, this did not take place, and the price of a bitcoin plummeted once more to $25,000 at this point.
We both invested in the same currency, but I won and he lost because my entry and exit timing was better. Moreover, I intended to use the term "luck" here due to the fact that the digital currency market in particular relies heavily on luck. Like the stock market, we look at it and anticipate the future.
Watching a currency's price rise or fall by more than 20% in a single day is easier than drinking water🤣🤣
Due to these extreme price swings throughout their lives, a market for a method of exchange known as stablecoins or stable currencies developed, preventing the market from expanding and becoming more widespread.
If he ever fell, I would sell them for any of the market's stable currencies. I almost guarantee that the $10,000 I know will not be transferred because this currency has a fixed value of $1. I didn't have to deal with traditional banks at the same time to keep my money in the digital currency system. A guaranteed stable currency or collateralized stablecoin is the first type of stable currency. Assets and reserves for these currencies are guaranteed to be at least equal to or greater than their value. For instance, in order to maintain the price of one Tether at one dollar, the digital currency market must have reserves worth 80 billion US dollars under the control of the company issuing this currency because the Tether currency is backed by US dollar reserves.
Whether in the form of treasury bonds or deposits in bank accounts, the currency is protected by reserves of real assets equal to its value.
In the past, the same idea of linking gold to the dollar. The first kind of digital currency that is not covered or guaranteed in need is called algorithmic stablecoins or arithmetic stable coins. The developers claim that these currencies should be powered by a computational mechanism or algorithm that ensures that their price, preferably fixed at one dollar, is guaranteed without any guarantees.
Let me use the most well-known form of currency as an illustration: the TerraUSD currency, which is considered to be one of the primary causes of the digital currency market depression.
She and her sister Luna are of the opinion that the story began in September 2020, which is more than a year and a half after a South Korean programmer named Do Kwon established a stable cryptocurrency called TerraUSD through his company Terraform Labs and launched a regular cryptocurrency called Luna in February 2019. Luna is a digital currency, and TerraUSD is meant to be a currency that is stable and has a fixed price of $1.
Its price changes in response to supply and demand, just like the prices of Bitcoin, Dogecoin, and other digital currencies on the market.
Pride of Korea, where will you guarantee that the price of TerraUSD will remain constant at $1 without any assets that include or support it? This is Captain Kwon's most important question right now. worth? I mean, if people decided to sell their teras early in the morning, from where would you get the money? In fact, Kwon responded brilliantly. He informed you that an algorithm based on the idea of arbitrage or arbitrage will be used to link the Terra to Luna to ensure the TerraUSD's stability.
The color's price fluctuation in response to supply and demand and the unlimited transferability of tera USD, which is equivalent to one dollar, form the foundation of the algorithm.
You can sell five of the color currency for one TerraUSD if its current price is 20 cents.
A single TB can be purchased in five colors. This is based on the $1 fixed price of the terra. For instance, how will the terra revert to its original value, which is supposed to be $1, if its price drops from $1 to 95 cents? Here, arbitrage comes into play. As a trader, I go to buy TerraUSD the first time I see it trading at a lower price than the dollar and use it to buy a particular color. So, why do I select a specific color to go with it? One luna terra is worth one US dollar, despite the fact that the actual cost of a terra is only ten cents.
Therefore, if I have a thousand TerraUSD and the market price of a luna is $2(for example), I can purchase 500 Luna for a thousand Terras, and I almost immediately make a profit due to the fact that the thousand Terras I bought each cost 95. For example, I paid only 950 dollars for them and bought 500 colors with them, each of which is worth 1000 dollars. As a result, there is a gain of $50. I'll find out how this relates to the Terra's stability from someone. To put it another way, how does this move guarantee that one US dollar will once again be worth one tera?
Shortly, the US$1,000 worth of terabytes you used to purchase the field for you. They burn as soon as the purchase procedure is completed. I mean that they are no longer a part of the trading circle. New colors hit the market to replace the old teras. This suggests that the number of tera currently available on the market has decreased. Its price rises until it reaches its previous level of $1 when you and I do it now, as the number of terras decreases even more.
However, at the same time, its cost drops and there are more colors to choose from. Consequently, the owner of Terras will leave it and go buy a brand-new color that will be produced for the first time. The number of colors on the market increases while their prices decrease. Other owners of terras become concerned about the color's low price and sell it as the number of colors increases and its price decreases.
They refer to this as the Death Spiral or The Death Spiral, and we like it as a loop or spiral. To meet demand for TerraUSD, the company that developed Luna and Terra created a decentralized lending platform known as Anchor Protocol just a few days ago. This is exactly what transpired with Terra and Luna, as I will explain to you. Investors who purchase TerraUSD and keep it there will be eligible for interest rates of 19.5%, according to the platform's concept. As of May 6, the Terra's Anchor Protocol had $14 billion in deposits. A significant portion of these deposits began to be withdrawn abruptly within three days of the Federal Reserve raising interest rates in the United States.
The price of TerraUSD has dropped from $1 at the beginning of the month to around 17 cents. People are now carrying their money in this currency because it is a stable currency whose value is fixed at $1. Al-Abit increased the trading circle's supply of TerraUSDs to nearly 7 trillion copies.
This happened because neither the Luna currency nor the TerraUSD currency have any real assets to back them up. They both come from the air. In theory, in order to escape the TerraUSD, you must examine the Luna's body. The people who think about it enter the luna because its price has fallen.
I tell them to think six times before they land.
Last but not least, I have some advice for you: Don't buy and sell cryptocurrencies based on your emotions or if they are brand-new
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