Explain How a Sudden Price Spike in One Token Impacts the Pool’s Token Reserves Due to X Y = K

If one token's price spikes, the pool's price becomes temporarily cheaper than the external market. Arbitrageurs will quickly buy the now-undervalued token from the pool.

To maintain x y = k, the pool must sell a large quantity of the appreciating token and acquire more of the relatively depreciating token. This rebalancing leads to the pool holding fewer units of the high-value token and more units of the low-value token, causing impermanent loss.