When The Foam Burst, It Must Not Be What You Imagined

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The terrible crash story of Luna currency will not appear for the first time in the capital market, nor will it appear for the last time in the capital market. Recently, the news of the collapse of the virtual currency Luna has spread all over the market. Reviewing the trend of Luna currency in recent years, we can get a profound lesson: when a foam collapses, the process of collapse must not be what you imagined.

For the foam, many investors who think they are familiar with the way of speculation often have their own interpretation. There are generally three interpretations: the price of the target has risen so much that it is worth investing even if it is worthless; If so and so's target price has fallen so much, it's worth reading the bottom. It doesn't matter whether there is value or not; The target of XX and XX also fell a lot in history, and then rose again. Now it has fallen so much, it is worth reading the bottom.

Next, the story of Luna coin will tell us that the above three interpretations of speculation are completely unreliable.

Highlight time

In the virtual currency circle, Luna currency used to be the fifth largest virtual currency in circulation market value, so it has a strong reputation in the currency circle. Statistics show that Luna coins were first launched in May 2020, and the initial trading price was slightly higher than US $2. After listing, Luna currency was once in a low popularity. By December 2020, a Luna coin will be only $0.50.

However, people familiar with the financial foam know that the financial foam may appear anywhere from tulip bulbs to rubber stocks in the late Qing Dynasty, to Japanese real estate in the 1980s, orchids in Yunnan, and then to American technology stocks in 2000. For Luna coins, the previous downturn did not hinder its future path of immortality: the depressed initial price made the legend of Luna coins more dazzling.

In 2021, Luna coin began its first glory. Starting from $0.50 in December 2020, Luna currency rose to the highest of about $21 in May 2021 in less than half a year, bringing more than 40 times the return to investors involved.

The glory of Luna coin in May 2021 did not last long. By June 2021, the price of Luna currency will fall to about US $5, making the investors who buy at apex lose 3 / 4. For many people, such a huge decline is enough to make them distressed. However, the remaining quarter of the money makes many people unable to give up.

History tells us that foam often repeat many times before they finally collapse. People who are discouraged by the first decline will still have a glimmer of hope for Luna currency. You know, a really fierce foam will not only take away 3/4 of your money. Now, the remaining quarter of the money on Luna coins, like bait floating in the water, seduces fat fish who come and go.

From June 2021 to April 2022, the big market of Luna currency starts again. From about $5 in June 2021, Luna currency once rose to about $119 on April 5, 2022. For investors who participate in the whole process, this huge market enables them to earn about 23 times the return. Although Luna currency once fell by 50% during the period, what is this decline, compared with the return of 23 times over this period?

Such a huge market makes investors participating in Luna currency full of confidence. Luna currency once became the fifth largest virtual currency in market value in 2022. At the same time, it also won the reputation of "Maotai in coin".

However, where is the value of virtual currency, which has no use value (unlike cars and houses), no asset endorsement (unlike stocks corresponding to physical assets), and no government and legal protection (neither protected by law nor legal tender in China)?

Road to collapse

In April 2022, Luna coin ushered in its own highlight moment. On April 5, the price of Luna currency (closing price) was as high as about $119. However, such a beautiful dream will soon be awakened. The speed and amplitude of this awakening are unimaginable to anyone.

From April 5 to April 17, the price of Luna currency fell from $119 to $81, down 32%. This fall is the last warning before the collapse of Luna currency. But for those who indulge in it, all they remember is the amazing miracle of "23 times in 10 months". You know, such an amazing miracle was achieved after a decline of 3 / 4. What is the small decline of 32% compared with now? The last chance to escape before the crash was not taken seriously by many people.

By April 26, the price of Luna currency rose again and returned to $96. The years seem to be quiet again. Investing in Luna coins seems to be the right decision. By May 5, the price of Luna currency fell slightly to $85. Compared with the previous decline, what is this small adjustment?

Now, the big mouth of death has been opened, but few people can see what it looks like inside. After all, this is a "Maotai in currency" that has risen from $0.50 in 2020 to about $100 in 2022. Many people think, even if they start to fall, what can they do? Have I not had a chance to escape with my smart head and quick eyes?

On May 6 (Beijing time, the same below), the price of Luna currency fell from $85 to $80, which still seems insignificant. On May 7, it fell to $73. On May 8, it fell to $65. It fell to $60 on May 9. On May 10, it plummeted to $30. On May 11, it once hit US $1.

In just a few trading days, the price of "Maotai in the currency" of more than $100 in the past was only $1. But speculation is as old as a mountain. Now, some investors began to say, "they have fallen so much, down 99%, where else will they fall?" Wait a minute. For worthless investments, any number greater than 0 may contain risks. After a 99% drop, it is still possible to fall a few more 99%.

From 9 o'clock to 23 o'clock on May 11, Luna currency rebounded back to $6 from $1, which seems to bring a glimmer of dawn to people. However, the dawn seen when the blade licks blood is often the cold light on the blade. By 22:00 on May 12, Luna coins had only $0.01 left, down 99% from the previous $1.

Can you fall by 99%? The answer is yes. At 8:25 on May 13, the price of Luna currency fell to US $0.00012, another 99%.

Fell 3 99%, can you still fall? The answer is yes. As of 12:52 on May 13, the quotation of Luna currency was US $0.00005, down 60% from US $0.00012. Moreover, this quotation is no longer updated, and the real transaction price may be lower than this price: if there are still active transactions.

Now, the story of Luna coin is over. Let's go back to the three speculative reasons that many speculators like to use before to see if they are reliable?

First, price increases have value. The price of Luna currency has risen so much. Is it valuable? Second, if you fall too much, you can copy the bottom. Luna coins have fallen by several 99%. Has 99% fallen much? Can I copy the bottom? Third, it rebounded in those years and will rebound now. Luna coin rebounded in those years, but has it rebounded now? Does a little rebound from $0.00005 make sense for a loss falling from $100?

"Qin people have no time to mourn for themselves, but later generations mourn for it. Later generations mourn for it without learning from it, which also makes later generations mourn for later generations." (it comes from Du Mu's "a Fang Gong Fu".) The terrible crash story of Luna currency will not appear for the first time in the capital market, nor will it appear for the last time in the capital market. It is of great significance for us to realize that we should never participate in those worthless foam speculation. Because when every foam collapses, it must not be what we imagined.

Author: Chenjiahe, chief investment officer of Jiuyuan Qingquan technology, source: securities times, original title: when the foam collapsed, it must not be what you imagined

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