GoSeigen wrote:I don't buy the short attack theory. Did shorters profit from the falls? Of course. Were they the cause of the price collapses? No.
You don't need to be an expert to know that the "value" of these crypto coins has been a fantasy all along, so the story is a simple one: normality returns; suckers lose everything.
There's always two sides to these things - an underlying misvaluation can persist for a long time and the trigger for it to be reassessed which can come sooner or later. It's like how the judgement in the Microsoft monopoly case was one of the main triggers for the collapse of the dotcom boom, even though pets.com and garden.com had passed the "daft" level of valuation many months before.
The attack theory is plausible though, it's nothing the market hasn't seen before many times - liquidity arbitrage, attacking a peg that everyone trusts but which is in fact built on sand, that kind of thing. For me the most shocking aspect of the story is how anyone believed the magic beans behind the Luna reserves - but fair play to them for having a go and trying to turn magic beans, into Bitcoin magic beans, into hard cash reserves as the basis of something "real". Just a shame for them that the music stopped before they'd grown any beanstalks.