{"id":446851,"date":"2022-05-14T09:20:11","date_gmt":"2022-05-14T06:20:11","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/this-is-why-youre-losing-money\/"},"modified":"2022-05-14T09:20:11","modified_gmt":"2022-05-14T06:20:11","slug":"this-is-why-youre-losing-money","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/this-is-why-youre-losing-money\/","title":{"rendered":"#This is why you\u2019re losing money"},"content":{"rendered":"<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3c808e137ee\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #dd3333;color:#dd3333\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #dd3333;color:#dd3333\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3c808e137ee\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/buradabiliyorum.com\/en\/this-is-why-youre-losing-money\/#%E2%80%9CThis_is_why_youre_losing_money%E2%80%9D\" >&#8220;This is why you\u2019re losing money&#8221;<\/a><ul class='ez-toc-list-level-2' ><li class='ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/buradabiliyorum.com\/en\/this-is-why-youre-losing-money\/#Crypto_confidence\" >Crypto confidence<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1><span class=\"ez-toc-section\" id=\"%E2%80%9CThis_is_why_youre_losing_money%E2%80%9D\"><\/span>&#8220;This is why you\u2019re losing money&#8221;<span class=\"ez-toc-section-end\"><\/span><\/h1>\n<div>\n                            If you had invested \u00a3100 (US$122) in the cryptocurrency Luna a month ago, you might have been quietly confident you\u2019d made a sensible bet. But Luna\u2019s value has since fallen drastically \u2013 at the time of writing, that \u00a3100 is worth around 4p (5\u00a2).<\/p>\n<p>Luna was by no means the only victim in a week where cryptocurrencies were <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/coinmarketcap.com\/charts\/\">down 30%<\/a>. Some have recovered to a certain extent, but this still represents an aggregate seven-day loss of over US$500 million (\u00a3410 million), prompting existential questions about the future of the market.<\/p>\n<p>                <iframe loading=\"lazy\" src=\"https:\/\/fast.wistia.net\/embed\/iframe\/ebq6s0114h?videoFoam=true&amp;autoPlay=true\" title=\"\" allowtransparency=\"true\" frameborder=\"0\" scrolling=\"no\" class=\"wistia_embed\" name=\"wistia_embed\" allowfullscreen=\"\" msallowfullscreen=\"\" width=\"100%\" height=\"100%\"><\/iframe><\/p>\n<p>This crash was possibly triggered by a financial \u201cattack\u201d on the stablecoin <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.terra.money\/\">Terra<\/a> (UST), which is supposed to match the US dollar but is <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/coinmarketcap.com\/currencies\/terrausd\/\">presently trading at just 18 cents<\/a>. Its partner coin, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/coinmarketcap.com\/currencies\/terra-luna\/\">Luna<\/a>, subsequently collapsed.<\/p>\n<p>An <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/twitter.com\/onchainwizard\/status\/1524123935570382851?s=21&amp;t=k7TF2BnacPzZLATJYyN1qg&amp;fbclid=IwAR3JFEsAvb5f-ygzNJHW543S6Xv9-DldkWiDs5gnqhlEG2f8BOjJIo_HEp0\">attack<\/a> of this kind is extremely complex, and involves placing multiple trades in the crypto market in an attempt to trigger certain effects \u2013 which can provide the \u201cattacker\u201d with significant gains.<\/p>\n<p>In this case, these trades caused Terra to fall, which in turn brought its partner coin Luna down too. Once this was noticed, it caused panic, which in turn sparked market withdrawals, which then caused further panic. Some (but not all) stablecoins rely to a large extent on perception and confidence \u2013 and once this is shaken, big falls can come into effect.<\/p>\n<p>Crucially, the recent major falls in cryptocurrencies have called into question just how stable <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/coinmarketcap.com\/view\/stablecoin\/\">stablecoins<\/a> really are. After all, they are designed to have practically zero volatility by maintaining a \u201cpeg\u201d to some other underlying asset.<\/p>\n<p>Yet the effects seen this week spilled over into the whole crypto space, to create single-day losses akin to \u2013 or arguably worse than \u2013 a \u201c<a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.telegraph.co.uk\/business\/2022\/05\/12\/collapse-cryptocurrencies-likened-run-banks-value-terra-luna\/\">Black Wednesday<\/a>\u201d for crypto (Black Wednesday was the day in 1992 when speculators forced a collapse in the value of the pound). Even the leading stablecoin <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ft.com\/content\/5887ef43-d43a-4608-a1ac-aacc99f076b9\">Tether lost its peg<\/a>, down to 95 cents on the dollar, perhaps demonstrating <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/stablecoin-volatility-shows-an-urgent-need-for-regulation-to-protect-consumers-182886?fbclid=IwAR0NWGxqIz47cYPTb9SrOszajI5N-hbVUE7xmIuzOt94pV4X41TZNupiS7s\">the need for regulation<\/a>. For if stablecoins aren\u2019t stable, then where is crypto\u2019s safe space?<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Crypto_confidence\"><\/span>Crypto confidence<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>How investors respond will be key to the future of cryptocurrencies. We have already seen panic and despair, with some comparing this crash to a traditional run on the banks. But with <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.ecb.europa.eu\/pub\/pdf\/scpwps\/ecbwp1711.pdf\">bank runs<\/a>, customers tend to be worried that their bank will be unable to give them their money, rather than worrying that their money has become worthless.<\/p>\n<p>A more accurate comparison is with <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/www.vox.com\/the-goods\/2022\/5\/10\/23065007\/stock-market-crash-bitcoin-price-inflation\">stock market crashes<\/a> where investors worry that the stocks and shares they hold may soon be worthless. And so far, reaction to this crypto crash suggests that a large section of crypto holders view their investments in a similar way.<\/p>\n<p>Notwithstanding historical price volatility, there is a basic assumption often seen in investor behavior: that the asset price will increase, and will keep on doing so. In this scenario, the investor doesn\u2019t want to miss out. They see the asset rising, consider it a \u201csure thing\u201d and then invest.<\/p>\n<p>Frequently buoyed by initial successes, the investor may then put in more. Combine this with <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/social-mediaa\/\" data-internallinksmanager029f6b8e52c=\"1\" title=\"Social Media\" target=\"_blank\" rel=\"noopener\">social media<\/a> and the fear of missing out on \u201cinevitable\u201d gains, and the investments continue.<\/p>\n<p>Put simply, many will have invested in cryptocurrencies because they believed it would make them richer. This belief has no doubt been shaken.<\/p>\n<p>But another motivation for investing in cryptocurrencies may be a belief in their transformational nature, the idea that cryptocurrencies will eventually replace traditional forms of financial exchange.<\/p>\n<p>For these investors, any increase in the value of a cryptocurrency is a demonstration of the increasing power of cryptocurrency over traditional money. But likewise, a significant decline in the value of crypto is not simply a monetary loss \u2013 it is an ideological one.<\/p>\n<p>At the same time though, this ideological stance creates an investor group far less likely to sell in the face of any sharp fall. And it is this group that may yet provide hope for the sector.<\/p>\n<p>In established stock market crashes we talk of a return to \u201cfundamental value\u201d. The fundamental value of crypto is frequently assumed to be zero. However, perhaps there is at least some fundamental value that is based on belief. The size of the investor pool who own cryptocurrency because they believe in its long-term future, and the promise of a new money, may determine that fundamental value of crypto.<\/p>\n<p>Indeed, if we consider cryptocurrency investors as different groups with different motivations, we can better understand the behaviors we are seeing. Investors can perhaps take solace that we may have seen the worst of this crash and that better times may be ahead. But as any financial adviser will tell you, in crypto as in any other market, nothing is guaranteed.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img decoding=\"async\" loading=\"lazy\" style=\"border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;\" alt=\"The Conversation\" width=\"1\" height=\"1\" class=\"js-lazy\" src=\"https:\/\/counter.theconversation.com\/content\/183048\/count.gif?distributor=republish-lightbox-basic\"\/><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https:\/\/theconversation.com\/republishing-guidelines --><\/p>\n<p><noscript><img decoding=\"async\" loading=\"lazy\" style=\"border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;\" src=\"https:\/\/counter.theconversation.com\/content\/183048\/count.gif?distributor=republish-lightbox-basic\" alt=\"The Conversation\" width=\"1\" height=\"1\" class=\"\" srcset=\"\"\/><\/noscript><br \/>\n<em>This article by <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/profiles\/gavin-brown-765145\">Gavin Brown<\/a>, Associate Professor in Financial <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/technology\/\" data-internallinksmanager029f6b8e52c=\"4\" title=\"Technology\" target=\"_blank\" rel=\"noopener\">Technology<\/a>, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/institutions\/university-of-liverpool-1198\">University of Liverpool<\/a>; <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/profiles\/richard-whittle-257891\">Richard Whittle<\/a>, CAPE Policy Fellow, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/institutions\/ucl-1885\">UCL<\/a>, and <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/profiles\/stuart-mills-884987\">Stuart Mills<\/a>, Fellow of Behavioural <a href=\"https:\/\/buradabiliyorum.com\/en\/category\/sciencee\/\" data-internallinksmanager029f6b8e52c=\"5\" title=\"Science\" target=\"_blank\" rel=\"noopener\">Science<\/a>, <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/institutions\/london-school-of-economics-and-political-science-1219\">London School of Economics and Political Science<\/a> is republished from <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\">The Conversation<\/a> under a Creative Commons license. Read the <a rel=\"nofollow noopener\" target=\"_blank\" href=\"https:\/\/theconversation.com\/cryptocurrencies-why-theyve-crashed-and-what-it-could-mean-for-their-future-183048\">original article<\/a>.<\/em>\n                        <\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><\/p>\n<blockquote><p><strong><span style=\"color: #ff6600;\">If you liked the article, do not forget to share it with your friends. Follow us on\u00a0<span style=\"color: #ff0000;\"><a style=\"color: #ff0000;\" href=\"https:\/\/news.google.com\/publications\/CAAqBwgKMLG0nwswvr63Aw\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">Google News<\/a><\/span>\u00a0too, click on the star and choose us from your favorites.<\/span><\/strong><\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\">For forums sites go to <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/forum.buradabiliyorum.com\/\" target=\"_blank\" rel=\"noopener\">Forum.BuradaBiliyorum.Com<\/a><\/span><\/strong>\n<\/p><\/blockquote>\n<blockquote>\n<p style=\"text-align: center;\"><strong>If you want to read more like this article, you can visit our <span style=\"color: #ff9900;\"><a style=\"color: #ff9900;\" href=\"https:\/\/en.buradabiliyorum.com\/technology\/\" target=\"_blank\" rel=\"noopener\">Technology category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n<p><span style=\"color: black;\"><a style=\"color: #ff9900;\" href=\"https:\/\/thenextweb.com\/news\/crypto-crash-explainer-why-losing-money-luna\" target=\"_blank\" rel=\"noopener\">Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>&#8220;This is why you\u2019re losing money&#8221; If you had invested \u00a3100 (US$122) in the cryptocurrency Luna a month ago, you might have been quietly confident you\u2019d made a sensible bet. But Luna\u2019s value has since fallen drastically \u2013 at the time of writing, that \u00a3100 is worth around 4p (5\u00a2). Luna was by no means&#8230;<\/p>\n","protected":false},"author":1,"featured_media":446852,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"https:\/\/img-cdn.tnwcdn.com\/image\/hardfork?filter_last=1&fit=1280,640&url=https:\/\/cdn0.tnwcdn.com\/wp-content\/blogs.dir\/1\/files\/2022\/05\/crypto-crashin.png&signature=eeeac03fe53066fdfeef31185c9304d9","fifu_image_alt":"","footnotes":""},"categories":[18],"tags":[],"class_list":["post-446851","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-technology"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/446851","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=446851"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/446851\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/446852"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=446851"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=446851"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=446851"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}