Thread by @meetoluebube

Earlier today during my weekly update with our customers @koinsandkash, I shared some insights into what happened to the Crypto market last week.

As usual, I tried to break it down as much as possible.

I'm sharing this here as many people still need clarity.

#ust #luna #btc

This summary looks at the three main players involved - #ust, #luna and #btc

By extension, anytime btc is affected (especially negatively), most of the market reacts negatively too.

A quick summary of what went wrong in the market last week.

🧵👇🏽

1. $Terrausd ($ust) is an algorithmic stablecoin that has no backing unlike usdc, usdt, busd and dai. This is a new technology that has not worked successfully however #ust was making some progress. Nonetheless it still had clear flaws.

Some people knew that it still won't work and decided to attack it. Due to the fact that it had no proper backing, it fell like a pack of cards (a death spiral or bank run).

What happened is Mr. A wants to withdraw his money, then Mr. B then C,D,E,F then panic spreads everyone wants to withdraw but there's no proper backing so people begin to get less money than they thought they had.

Your $1 suddenly becomes $0.5. This causes more panic, more withdrawals and a deeper fall in the price.

2. $luna is the native coin of the platform and blockchain that houses $ust. It's a balancing mechanism not exactly a backing for $ust. However it is what is used to redeem withdrawal requests. When someone wants to withdraw $1, a luna coin is printed.

Due to massive withdrawal requests, many luna coins were printed, this led to hyperinflation of the coin and its value dropped badly.

It gets worse as many folks used $luna as collateral for their loans & got liquidated due to the price fall. This caused more supply & more dip.

Side note: understanding the first law of demand and supply is important.

The greater the demand, the higher the price and vice versa.

3. $BTC became the fractional backing of $terrausd a few weeks ago as the potential risks with the coin started showing much more due to its growing market cap. So as both $terrausd and $luna fell in value, the company had to be buying both coins by themselves.

They did this by selling their btc (and they have lots of btc). This created a short term dip in btc (due to lots of supply).

Sources say they had to sell most lf their $btc.

Conclusion

Now luna, terrausd and btc were all top 20 coins in the market as at May 1st. Due to their drop in value, the market dipped badly. Luna dipped by over 99%, terrausd by over 90% and btc by over 20%.

If this helped you, kindly RT for others.

Cheers.

Side note 3:

Our fund lost only 5%. Why?

First of all, we don't hold any luna or terrausd. Secondly, we don't put all our funds into the market (in fact we reduce it as the market turns bearish).

Our first mandate is to reduce risk and protect your capital so we avoid any doubtful coins and protocols.

Nonetheless, we don't offer any guarantees on fund performance.

#genesis #koinsandkash.

Why don't you join us in the Genesis Fund?
Read more on our website 👇🏽
koinsandkash.com and then get started.

We look forward to having you.
Cheers

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