Cryptocurrencies and NFTs have become an investment craze among young people. Unexpectedly, the world's third largest stablecoin, UST, collapsed in price in just a few days, and its value approached zero. What happened to this Lehman incident in the currency circle?

The price of the stable currency UST collapsed, and the cryptocurrency Luna evaporated 99% of its value, and even caused a massacre in the entire currency circle. Is cryptocurrency still worth investing in?

In fact, the idea is very simple. If you think that the market is long, as Warren Buffett said, never bet against U.S. stocks, and always be long in U.S. stocks, so if the long-term U.S. stocks are still long, then the long-term cryptocurrency will of course follow the U.S. stocks. To do the linkage, as long as the U.S. stock market stops falling, then the cryptocurrency, probably this bear market can end.

The outside world is constantly questioning, thinking that the epic collapse of UST and LUNA is not accidental, and even suggested that this incident is a "new type of Ponzi scheme"?

In fact, this can hardly be called a fraud. Why is it because we can only call it Ponzi, because the so-called fraud is to hide the truth, but if the rules are published, it is a bit unreasonable to call it a fraud. Isn’t Ponzi a fraud? No, so let's just say it's a Ponzi economy, not a Ponzi scheme.

To put it bluntly, stablecoins are to write a program and issue tens of billions of stablecoins worth tens of billions of dollars out of nothing. This type of capitalless finance. The issuance of any tokens or stablecoins cannot be managed, and the competent authorities have no way to regulate, because the issuance is not U.S. dollars, not Taiwan dollars, but tokens. Going back to look at the financial regulations, there is really no reason to break the law. In the end, only Open one eye and close the other and let the game continue, otherwise you will have to practice the Dharma to plug this loophole.

The event of UST detachment from anchoring can be briefly summarized in the following five points

1. The liquidity transfer of the UST market maker of the decentralized exchange on the blockchain creates a short-term liquidity vacuum, so that the market price of UST can be manipulated by a smaller amount of funds

2. Big crocodiles sniping at big UST traders sold UST on both centralized and decentralized exchanges in a short period of time, causing UST to quickly break away from the $1 peg

3. The domino effect, the UST price broke away from the anchor, causing panic among a large number of holders, who destroyed UST and exchanged it back to LUNA to sell at the market price, which immediately caused the LUNA price to collapse within two days, approaching zero

4. Investors have lost confidence in LUNA, and the liquidity of LUNA buyers is vacuum. Because the algorithmic stable currency anchoring mechanism cannot be effectively driven (the UST can be minted only by destroying LUNA), the buying pressure of UST cannot be created, and the price decoupling situation is more serious

5. Investors have completely lost confidence in LUNA and UST, and the price of LUNA has returned to zero; UST has been completely decoupled from $1, and the rescue funds of LUNA Foundation and LUNA Venture Capital cannot be recovered.

in conclusion

The fundamental problems of the LUNA and UST systems and the key reason for the bursting of the $40 billion market value bubble, it is the bear market background of cryptocurrencies that prompted a large number of investors to enter the market one after another to hold UST to earn 19.5% of excess deposit interest, which contributed to the growth of the LUNA ecosystem. The short-lived, it is precisely because the value of the LUNA Foundation's guaranteed assets and the currency price of the agreement pledged assets continued to decline in the bear market for a long time, which led to the amplification of the fundamental problems of the system, and the rescue funds could not support the huge selling pressure of investors who lost confidence.

Is it worth investing in the cryptocurrency market? It can only be said that there will be risks in investing. No one wants you to gamble on your wealth, and no one wants you to invest in Europe and India. If you can’t maintain a good investment mentality, it is impossible to just think about getting rich overnight. , we recommend one-click copying of Bida contracts and Bida perpetual contracts on Bida Exchange.

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