Recent news is filled with Adani and Hindenburg, Hindenburg and Adani, Adani and Adani, Hindenburg and Hindenburg 🙂
Okay sorry, we also have some clarity about Crypto Taxation presented in the budget in the news…wait what? We don’t 🙂😭 Let’s start again.
So, the current ‘Adani-Hindenburg’ situation is somewhat similar to what happened on 7th May,22 ‘THE UST DEPEG’. The biggest similarity was that both days really made you smash your screens right? (Like rn if you really did🤌🏻) Well, a simple concept to be understood here is about “Supply and Demand”. Let me explain to you..
Suppose you have 2 tomatoes (I hate them😭) and a crop failure occurs which leads to a sudden shortage in the market. You bought them at 5 rupees each when there was sufficient supply but now there is a shortage and people are willing to pay whatever money you ask! (I’m gonna ask for a million dollars 😭kiddin).
So you end up selling both the tomatoes for 20 rupees (ofc 10 each..basic maths bhyi 🙂). Now you made a profit of 10 rupees net by simply buying them low and selling them high 🤌 This is ittt!!! The core concept…you can apply it inversely as well..let’s assume you have to buy 2 tomatoes and the supply is in an excess due to excessive rainfall. Now, you will get them for a much cheaper rate as the supply is as adequate as it can be and all shopkeepers will have it.
Here you end up selling 2 tomatoes for 3 rupees and book a loss of 2 rupees. This is the sole concept being applied here.
The day when Hindenburg released the report, unrevealing some nail biting facts and making our portfolios red 😭😭 a large number of people (including me, better don’t laugh 🙂) began selling our shares. This led to an excess supply of shares in the market and not many (almost 0) interested in buying them back..which led to the share price falling down miserably 🤌🏻🤌🏻😭
This downward graph made our days with it’s lovely presence on 7th May too 🥲 when the UST Depeg took place. Same concept again..about $2 Billion worth of UST was unstaked and a massive sell-off was welcomed with teary eyes 😭 which led to a large supply of Luna in the market with almost no demand. Plus the whole UST luna scene ughh i don’t wanna recall😭 bad flashbacks.
Hence, the price crashed hard af and hit a lower circuit. Now don’t mistake lower circuit to be a circuit which is placed low🥲 it basically means the price of a stock or a Cryptocurrency which has hit the lowest price and now there are only sellers but no buyers left in the market.
Hope this explainer about supply and demand was fruitful to you and maybe helped you understand the concept behind sell-offs and sudden pumps. I assume you will make a lot of money now when you apply this concept in your trading 👀 so don’t forget my cut 👉🏻👈🏻