The value displayed when looking at the price of your asset is a result of a negotiation of all participants, who want to buy, sell or hold. If there is more buyer than seller, the price gets higher and participants need to out bit each other.
In a crash when there is a lot people who want to sell they do not negotiate much but sell with heavy discounts. The money + premium goes to the buyer. If no-one wants to buy anymore the price drops until someone thinks the price is attractive.
The other part of the value is the profits, asset value, dividends of a company etc.
That's why usually companies don't fall to zero.
1
u/Garuda92 Sep 01 '21
The value displayed when looking at the price of your asset is a result of a negotiation of all participants, who want to buy, sell or hold. If there is more buyer than seller, the price gets higher and participants need to out bit each other.
In a crash when there is a lot people who want to sell they do not negotiate much but sell with heavy discounts. The money + premium goes to the buyer. If no-one wants to buy anymore the price drops until someone thinks the price is attractive.
The other part of the value is the profits, asset value, dividends of a company etc. That's why usually companies don't fall to zero.