For bubbles, many investors who think they are well-versed in speculation often have their own interpretations. There are generally three kinds of interpretations: if the price of a certain target has risen so much, even if it has no value, it is worth investing; if the price of a certain target has fallen so much, then it is worth buying the bottom, whether it has value or not is not important; the history of such and such target It also fell a lot in the past, and then rose again. Now that it has fallen so much, it is worth buying the bottom.
Next, the story of LUNA will tell us that the above three interpretations of speculation are completely unreliable.
In the virtual currency circle, LUNA coin used to be the fifth-ranked virtual currency by market value in circulation, so it has a relatively loud reputation in the currency circle. According to the data, the LUNA coin was first launched in May 2020, and the initial trading price was slightly above $2. After its listing, the popularity of LUNA coin was sluggish. By December 2020, a LUNA coin is only $0.50.
But anyone familiar with financial bubbles knows that financial bubbles can appear anywhere, from tulip bulbs, to rubber stocks in the late Qing Dynasty, to real estate in Japan in the 1980s, orchids in Yunnan, and tech stocks in the United States in 2000. . For LUNA coin, the previous downturn did not hinder its future road to consecration: the low initial price made the legend of LUNA coin even more dazzling.
In 2021, LUNA coin started its first glory. Starting from $0.5 in December 2020, LUNA coin has risen to a peak of about $21 in May 2021 in less than half a year, bringing more than 40 times the return to investors involved.
LUNA coin’s glory in May 2021 didn’t last long. By June 2021, the LUNA coin price fell to about $5, leaving investors who bought at the top with a loss of 3/4. For many, such a huge drop was enough to make them feel bad. However, the remaining 1/4 of the money makes many people unable to give up.
History tells us that bubbles tend to repeat many times before they finally collapse. And those who were disheartened by the first drop will still have a glimmer of hope for the LUNA coin. You know, a really tragic bubble will not only take 3/4 of your money. Now, the remaining 1/4 of the money on the LUNA coin is like a bait floating in the water, seducing the fat-headed fish that come and go.
From June 2021 to April 2022, the big market of LUNA coins will start again. From about $5 in June 2021, the LUNA coin once rose to about $119 on April 5, 2022. For investors who participated in the whole process, this huge wave of market allowed them to earn a return of about 23 times. Although LUNA coin fell by 50% during the period, what is this drop compared to the return rate of 23 times during this period?
Such a huge market makes investors who participate in LUNA coins full of confidence, and LUNA coins will once become the fifth-largest virtual currency by market value in 2022. At the same time, it also won the reputation of “Moutai in the currency”.
However, for virtual currency, there is no use value (not like a car house), no asset endorsement (not corresponding to physical assets like stocks), no government and legal protection (not legally protected in China, nor legal tender) As far as the three non-investment objects are concerned, where is its value?
Road to Crash
In April 2022, LUNA coin ushered in its own highlight moment. On April 5, the LUNA coin price (closing price) was as high as about $119. However, such a sweet dream will soon be awakened. And the speed and magnitude of this awakening is unimaginable for anyone.
From April 5th to April 17th, the price of LUNA coin fell from $119 to $81, a drop of 32%. This drop was the last warning before the LUNA coin collapsed. But, for those who indulge in it, what they remember is the amazing miracle of “23 times in 10 months”. You know, such an amazing miracle was achieved after falling by 3/4. Now a small drop of 32%, what does it compare to? The last chance to escape before the crash was not taken seriously by many people.
On April 26, the price of LUNA coin rose again and returned to $96. Time seems to be quiet again, and investing in LUNA seems to be the right decision. By May 5, the price of LUNA coin fell slightly to $85. Compared to the previous drop, what does this little adjustment count?
Now, the mouth of the god of death has been opened, but few people can see what is inside. After all, this is a “Moutai in the currency” that has risen from $0.5 in 2020 to around $100 in 2022. Many people think in their hearts, even if it starts to fall, so what? Could it be that I, with a smart head and quick eyes, haven’t had a chance to escape yet?
On May 6 (Beijing time, the same below), the price of LUNA coin fell from the previous $85 to $80, which still seems to be irrelevant. On May 7, it fell to $73. On May 8, it fell to $65. On May 9, it fell to $60. On May 10, it plummeted to $30. On May 11, it touched $1 at one point.
In just a few trading days, the price of “Moutai in the currency”, which used to be more than 100 US dollars in the past, was only 1 US dollar. But speculation is as old as a mountain. Now, some investors are starting to say, “It’s down so much, down 99%, where else will it go?” Wait a minute, for worthless investments, any number greater than 0 may contain risks . After a drop of 99%, it may still drop by several 99%.
From 9:00 to 23:00 on May 11, LUNA coin rebounded from $1 to $6, which seemed to bring a glimmer of light to people. However, the dawn that the blade saw when licking blood was often the cold light on the blade. At 22:00 on May 12th, the LUNA coin was only US$0.01, which was 99% lower than the previous US$1.
It fell 2 99%, can it still fall? The answer is yes. At 8:25 on May 13, the price of LUNA coin fell to $0.00012, another 99% drop.
It fell 3 99%, can it still fall? The answer is still yes. As of 12:52 on May 13th, the LUNA coin was quoted at $0.00005, down another 60% from $0.00012. Moreover, this quotation is no longer updated, and the actual transaction price may be lower than this price: if there are still active transactions.
Now, the story of LUNA coin is finished, let’s go back and look at the three speculation reasons that many speculators like to use before, and see if they are reliable?
First, there is value in price increases. The price of LUNA coin has risen so much, is it worth it? Second, if you fall too much, you can buy the bottom. LUNA coin has fallen by several 99%, has 99% fallen much? Can you copy? Third, it rebounded in the past and will rebound now. LUNA coin rebounded in the past, has it rebounded now? Does a little bounce from $0.00005 make sense for a loss from $100?
“The Qin people are too busy to mourn themselves, and the descendants mourn. The descendants mourn and do not learn from it, and also make the descendants mourn for the descendants again.” The crash story is neither the first time in the capital market nor the last time it will appear in the capital market. What it means most to us is to realize that we should never participate in those worthless bubble speculation. Because every bubble burst, it must not be what we imagined.
The author of this article: Chen Jiahe, the author is the chief investment officer of Jiuyuan Qingquan Technology, source: Securities Times, original title: “When the bubble collapses, it must not be what you think”