Financial bugs that ordinary people don’t know about
After Luo Yonghao owed 600 million yuan, he turned his hopes to live streaming to sell goods. However, Feng Tang felt that the pace was too slow. If he wanted to pay back so much money, he would have to sell at least 6 billion worth of goods, and he might never be able to pay it back until he died.
He suggested that Luo Yonghao make use of the capital market, so Luo Yonghao successively registered the "Starry Sky Ambition" company and the "Make Friends" company. The equity of these two companies later soared due to Luo Yonghao's live broadcast.
Originally, someone wanted to spend 300 million to acquire shares in the first year, but Feng Tang asked Lao Luo to be cautious, because if he sold it, it would be equivalent to selling more than half of the shares.
Finally, at the end of the second year, a company paid 589 million to buy 40% of the shares of "Starry Sky Vision". Luo was relieved and successfully paid off his debts.
Did Lao Luo create value through live streaming? Not really, but he made money by increasing the value of his stocks, which in itself is a bug.
Next, let’s take a look at the cryptocurrency market. BTC
Currently, there is a BUG in the mechanism that defines rise and fall in all markets. If you understand this BUG and take advantage of it, you will take the first step towards achieving financial freedom through financial speculation.
This bug applies not only to the cryptocurrency market, but also to all markets you can think of, including commodity futures, foreign exchange, real estate, and stock market pricing mechanisms.
To take care of all the beginners, let's start with the basics.
The intraday price trend of the currency you see is actually a line connecting the latest transaction prices of each minute, and has nothing to do with the transaction volume.
This mechanism is not only applied to the currency market, but also to other commodity futures, foreign exchange and real estate markets.
The buy and sell orders in a transaction are equal, because a transaction must have a buyer and a seller.
So how did the price of the currency increase? It’s simple, because supply cannot meet demand.
Some people are confused. Isn't it said that the buying and selling orders in a transaction are equal?
Let me explain it in a simple way: if the current price of a coin is 10 yuan, and there are 10 people willing to buy this coin at 10 yuan, but only 9 people willing to sell it, it means that after 10 orders are completed, there is still 1 person who wants to buy it but cannot buy it.
If he must buy this coin, he can only go to a higher price to seek a seller to trade with him, for example, at 10.1 yuan. If he does this and really finds a seller to trade with him, then the latest transaction price is 10.1 yuan, and we will see the coin price rise from 10 yuan to 10.1 yuan.
If the selling orders at 10.1 yuan are still not enough, then this person can only go to a higher price of 10.2 to seek selling orders, and then we will see that the latest coin price is 10.2 yuan.
So you see, although the buy and sell orders in a transaction must be constant, the potential buy and sell orders at the same price are different. When the former is greater than the latter, the price will rise, otherwise it will fall.
The above is for easy understanding. To put it simply, in reality, buying and selling are not divided by the number of people, but by the capital.
For example, a person has 100 million in funds and he wants to use the 100 million to buy a certain coin, but the current price only has 50 million in funds to satisfy his selling order, so the remaining 50 million can only be traded at a higher price.
Similarly, the principle of currency price drop is the same. Just swap the buy and sell orders above.
After understanding the most basic logic of stock price fluctuations above, what is this BUG?
How can we use this underlying logic to make a profit for ourselves?
Because the coin price we see is the latest transaction price, which is the marginal price, which means that no matter how many transactions have been completed before, the transaction price of the latest transaction is the latest price of the coin, which has nothing to do with the transaction volume.
Imagine that if the current price of a coin is 10 yuan, and only one transaction has taken place in the last minute, and the transaction price of this transaction is 1,000 yuan, then we will see a spectacular scene, the stock instantly rises from 10 yuan to 1,000 yuan, and the market value increases 100 times. (This situation is very common in coin!)
Of course, in reality there would be no such fool who is willing to spend 100 times the price to buy the same thing.
Even if there is such a fool, according to the buy order mechanism of the exchange, he will give priority to the lowest sell price. That is to say, even if he is willing to buy this coin at a price of 1,000 yuan, but if someone places a sell order at 10.1 yuan, then he will also give priority to 10.1 yuan.
However, sometimes there are special circumstances that will allow you to see the price of a currency soar instantly.
For example, imagine that a certain coin has a big dealer, and suppose that this dealer has bought all the circulating stocks of this coin. Suppose the current price of this coin is 10U, and the total circulation is 1 million, then the total market value is 10 million U
Now let me ask you a question. If the dealer wants to push the price of this coin to 1000U, that is, to increase the market value 100 times to 1 billion U, how much will it cost for the dealer?
Answer: 0 yuan.
No way! You are not lying to me! It's unbelievable, right?
It's very simple, because all the circulation is in the hands of the dealer, so as long as he doesn't sell, there will be no selling in the market. He only needs to place a sell order at 1000U and use 1000U to complete the transaction. In fact, the 1000U returns to his pocket, but we can see that the intraday trend of this coin has increased from 10U to 1000U in an instant, and the market value has increased 100 times.
From this perspective, he increased his total assets 100 times without paying any cost.
Through this extreme example, I want everyone to understand a truth. When a certain institution holds a large amount of a coin (not necessarily 100%, it is equivalent to most of the coin's circulating market value being "frozen", and the actual circulating market value is very small). In this case, the cost of pushing the coin price to a high level is very low. The higher it is pushed, the lower the cost of continuing to push it up, and the easier it is to rise.
It doesn't matter, even if the market value doubles, and the price reaches 10,000 or 100 million, it's just a floating profit on the market. If he wants to make a real profit, he must sell all the coins he holds and cash them out.
This is the bug in the pricing mechanism of the capital market. Using the latest transaction price to define the latest market price seems reasonable, but this makes capital prices easily manipulated by big funds, allowing the target price to rise far beyond its true value.
We often talk about strong market coin, which means that the chips are in the hands of the dog dealer. If he wants to pull up the market, he can do so with just a move of his hands, and at a very low cost. Because there is little selling pressure and he has many chips in his hands, he has the priority pricing right.
It is the same as the current situation where various institutions are scrambling to acquire BTC chips. Whoever has more chips has the right to speak! Currently, the BTC spot ETF already holds 108.24B BTC! It accounts for 5.72% of the Bitcoin market value. When this proportion gets bigger and bigger, then whatever the institutions say is what counts!
The cryptocurrency world is not only a stage for the game of human nature, but also an arena for the collision of beliefs and strategies. Every fluctuation is a screening and reshaping, eliminating those who blindly follow the trend and leaving those who truly understand the laws of the market.
Now that you have read this far, please like it and share it with your fellow cryptocurrency friends!