Why Crypto Crashed Yesterday, in Less than 200 Words
A lot of people are incentivized to say that crypto is complicated. It is not. Here is why the market took a dive over the past 48 hours, in less than 200 words.
There was a digital coin (UST) that was supposed to be a direct equivalent to 1 dollar. No more, no less. Ever. Super safe way to get into crypto, right?
It stayed stable by being strictly equal to another digital coin (LUNA).
So, if prices of UST went to $0.99 because of high supply, you could buy some using LUNA, then resell it when it got back to $1. Thus making a small profit.
That way, the price is always stable thanks to market incentives.
Sounds good until you realize that LUNA wasn’t backed by anything but vibes (belief in its inherent worth). Literally.
So when people started stressing out because of the stock markets, oil prices, war in Europe… the death spiral began💀.
The more people sold, the more people wanted to sell, until the price was less than a cent. Instead of a dollar.
In less than 48 hours.
Now people are asking if ANY crypto is safe.
Hint : it’s not.
Good luck out there.