YFI Plunges 48% Intraday. 😱
Believe that DeFi veterans should be quite familiar with the myth of YFi. If new partners are not very clear, let me explain a little.
What is YFI? For secondary traders, it seems that they don't care much about its ecology, but rather care about when there will be fluctuations and ups and downs.
In fact, the growth of YFI in 2020 was very exaggerated. At one point in 2020, it was even listed as a thousand-fold coin! Ten thousand-fold coin.
The highest price once exceeded BTC, reaching $95,000.
YFI rose from an initial $3 to $4,500 in a week. A 1,500-fold increase in a week.
If at the highest point, $95,000/$3=31,666 times. 😱 If you bought 10,000 at $3 and sold at the highest point of $95,000, calculate how much money you would get? (Comment below).
So what does this have to do with the recent plunge?
Detailed interpretation: This recent plunge led to the liquidation of nearly $50 million in open positions on dydx, including the insurance fund of DYDX, which also reportedly lost $8 million due to high-profit trading strategies. This strategy led to a large amount of YFI being liquidated. YFI's market value dropped from $500 million to $300 million.
Why the sudden plunge? The following statements are related:
The market believes it is due to insider selling pressure. Because nearly half of the chips in YFI's supply are held by 10 wallets. This wave of operations is said to be "harvesting behavior." Some people sold at the high point. And there are obvious short positions.
DYDX's founder came out to speak, he believes that in the past few days, the amount of open YFI contracts on DYDX has soared from $800,000 to $67 million, and this operation is basically done by one person. Two weeks ago, he attempted to attack the sushi market on dydx in a similar way, but failed. The open YFI contracts on dydx are more than any other exchange.
Before the price plummeted, dydx did take action to increase the initial margin ratio of YFI, but ultimately failed to resist the attack. The attacker withdrew a large amount of USDC from DYDX before the price collapsed. The price of YFI plummeted in the spot market. It seems to be a deliberate attack on the large open positions on dydx.
DYDX founder Antonio believes that this is a market manipulation forced by a well-funded attacker.
The purpose is to deplete DYDX's insurance pool funds. In addition, the founder disclosed a series of updates about dydx.
Is this really an unavoidable sudden plunge?
I carefully looked at the market, and I don't think so.
The following picture is the daily chart of YFI/USDT
At the $14,200 level, if you have a judgment on technical analysis, this is a major resistance level.
In terms of operation, it is not an opportunity to enter long positions, but rather an excellent position to exit long positions and consider whether to enter some short positions.
Many traders understand previous highs and double tops. Since you understand previous highs and double tops, does the decline here fit very well with technical analysis? What is unexpected is the extent of the decline. The price of the coin did not undergo a normal adjustment, but rather an accelerated plunge. Ultimately, in trading and investing, it is important to strictly execute the stop-loss space for each order.
Stop-loss played a full role in the face of this market. If you have set a stop-loss, it seems that this plunge did not cause too much loss for you. As for the narrative on the chain, it seems to have nothing to do with us.
I am not deliberately interpreting that trading techniques can capture a 48% plunge in this market. The take-profit is an expected value, not an absolute value. I want to warn everyone through this incident and market analysis, to analyze and judge in multiple ways for each trade, rather than engage in chasing highs and killing lows trading behavior. #YFI
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