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.