Original author: Fairy, ChainCatcher
Original editor: TB, ChainCatcher
“Delisting bomb” turns into “wealth rocket”?
On April 24, Binance announced that it would delist ALPACA tokens. Normally, what awaits ALPACA should be selling, panic, and a sharp drop. However, ALPACA has gone against the norm and has risen by more than 650% since the announcement.
Is this bizarre rebound the last gasp of the project, or a foreshadowing by capital players? Behind this sudden surge, perhaps a storm is brewing...
Image source: coingecko
The countdown to delisting turns into a time of “slaughter”
On April 10, Binance launched the second round of voting to delist. A week later, the results were announced, and ALPACA ranked seventh among 17 candidate projects, and the delisting crisis began to emerge. On April 24, Binance officially announced that it would delist ALPACA on May 2 and liquidate perpetual contracts on April 30. As soon as the news came out, the price of ALPACA dropped sharply from $0.0329 to $0.029, and the market value shrank to $5 million.
Just when the market generally believed that ALPACA would be unable to recover, a dramatic scene occurred: the price rose from $0.029 to $0.0857 within 1 hour, an increase of 195%. This sudden surge caught the short sellers off guard and laid the groundwork for a more crazy trend in the future.
On April 25, Alpaca Finance officially announced that due to the trading volume exceeding 1 billion, market makers had requested to issue additional tokens to maintain liquidity, but canceled the plan after community opposition. This change undoubtedly dealt another blow to the Air Force.
As a result, on April 26, the volume of ALPACA liquidations even exceeded that of Bitcoin, and most of them were short orders. The entire market seems to have become a precision harvesting war against shorts.
Image source: Coinglass
“Short Squeeze Script”
Regarding the rebound of ALPACA, He Yi said that this might be a quick return of investors who bought shells through short-term trading. Based on the analysis of community users @LuBtc 888, @0x_ooorange, and @Mumu_yay, we have sorted out a complete short squeeze script:
1. Advance planning before delisting
Before the delisting announcement was released, the banker may have learned or noticed the abnormality in advance, and there was suspected accumulation of funds around April 19. During this period, the trading volume of ALPACA on Binance increased significantly, but the price increase was extremely limited.
2. Creating misaligned expectations and the emergence of a “bad news trap”
The market generally expected that delisting = plummeting, retail investors and short-term speculators collectively took a bearish view, short orders poured in, and the open interest of ALPACA contracts soared. Market makers took advantage of the situation to absorb funds at low levels, built long positions at the bottom, and then raised the spot price, triggering a series of short orders to blow up.
3. Changes in rules accelerate the pace of short squeeze
Binance shortened the funding rate collection cycle from 8 hours to 1 hour. The ALPACA funding rate once fell to -2%. Short sellers not only bear the risk of liquidation, but also have to pay high interest every hour. They have to speed up their position closing, resulting in accelerated short squeeze and a rapid increase in the speed of pulling up the market.
4. The profit model of the main force
Spot market: Buy stocks at low prices amid the panic of delisting, pull up the market to create the illusion of a last gasp, and attract retail investors to chase high prices and then sell at high prices.
Contract market: holding huge long positions and continuously collecting interest paid by short positions through a negative fee mechanism to achieve two-way profits.
ALPACA market outlook
The market is divided on ALPACAs future trend. @Mumu_yay believes that the delisting announcement will trigger the liquidation mechanism, which means that both long and short positions will be automatically liquidated. In this case, the banker does not need to worry about how to find exit liquidity, but only needs to wait for the liquidation to be triggered.
However, crypto KOL Kuang Ren holds a different view. He believes that from the perspective of game theory, the dealer will choose to gradually build long positions at high points, and then open short positions to smash the spot market and ultimately maximize profits through liquidation. Therefore, he concluded that ALPACAs trend will plummet.
In addition, trader @thankUcrypto pointed out that in general, if there is a pull before delisting, there will also be a dump before delisting. As the platform with the highest market liquidity, if Binance does not dump the market before delisting on May 2, then market makers can only wait until after delisting to dump the market on other exchanges. However, the lack of depth and buying on other platforms means that the profits from dumping the market will be greatly reduced.
The storm is not over yet, and the future is unpredictable
As the delisting date of May 2 approaches, the fate of ALPACA remains undecided. Its ups and downs have become a typical microcosm of capital game in the crypto market. The market is always in reincarnation, and perhaps new ALPACA will continue to appear in the future, performing similar scripts in different forms.
In the stormy sea, reason is always the only reliable anchor for investors. In the face of short-term emotions and temptations, only by staying sober and keeping your eyes open can you avoid getting lost in the hustle and bustle. Stay away from high-risk currencies that lack fundamental support, and be wary of the undercurrent of manipulation and control. When sailing in the sea, only a steady helmsman can stay away from reefs.
