You've probably heard these terms: market adjustment, pullback, crash, and scam, but what do they really mean?
Let's explain this with a simple potato story.
Imagine you are selling potatoes in town. Prices are usually stable, and business is good. One day, suddenly a rumor spreads: 'There will be a French fries festival, and the best French fries winner can win a grand prize!' As soon as the news comes out, everyone rushes to buy potatoes, demand surges, and prices rise accordingly. This situation is a natural reaction when market demand increases.
Next, some merchants appeared, buying up large quantities of potatoes, deliberately creating a shortage, and driving up prices. At this time, prices rose by 60%. But soon, the government intervened to investigate, declaring that there was enough supply of potatoes in the market, and everyone stopped panicking, so prices corrected, dropping by about 10%.
This phenomenon is called a 'market adjustment'. After the market overreacts, prices will correct and return to a more reasonable level.
However, new sellers have emerged in the market. After hearing about the rise in potato prices, they rushed to sell more potatoes. With the increase in supply in the market, prices fell again, this time by 25%. This is what we call a 'market pullback', a temporary price decline caused by new competition or increased supply.
But the story didn't end there. Suddenly, the government decided to import a large quantity of cheap potatoes. At this point, people started to panic and stopped buying local potatoes. As a result, prices plummeted by 50%. This is a 'market crash' — a sharp price drop triggered by unexpected news or significant events.
In the end, the truth was revealed: there was no so-called French fries festival; those merchants just fabricated lies to inflate prices. Once the news spread, the market completely collapsed, and prices nearly returned to zero. This is a typical 'market scam', where prices suffer a devastating drop when the market is manipulated and people lose trust.
So, is the current price fluctuation a normal market adjustment, a pullback, or a more severe crash? Or are we potentially facing the risk of a scam?
We need to observe carefully, analyze rationally, and maintain a clear mind, not be swayed by market emotions.