Altcoin Yearn Finance (YFI), which has been a shining star of 2021, experienced a surprising drop of 43% in just five hours. This indicates a significant sell-off. The sharp pullback in price occurred over the weekend, a period known for low trading volumes and increased sensitivity to market manipulation.
The Rapid Rise and Sudden Collapse of Yearn Finance’s YFI Token
Yearn Finance’s YFI token witnessed an extraordinary increase of 167% in just nine days from November 8th to November 17th. This remarkable surge reached a peak of $15,955 on November 17th. However, a selling wave in YFI erased a significant portion of the gains in just five hours.
After the drop, analysis of the factors reveals that the rapid selling wave resulted in a total liquidation of $4.95 million in YFI long positions, according to data from CoinGlass. Futures data showed a 47% increase in open positions, indicating that the selling may have been triggered by the initiation of short positions. This led to $1.51 million worth of short positions being liquidated, signaling the entry of potential FOMO bears into the market in the final moments of the 43% crash.
Potential Impact on Altcoins in the Coming Week
The recent increase in cryptocurrency prices due to expectations of ETF approval may harm altcoins in the coming week. The window opened from November 13th to November 17th for ETF approval played a significant role in the upward momentum of various altcoins. However, with the SEC delaying its decision, investors may engage in profit-taking activities, potentially triggering a widespread correction in the market.
As the cryptocurrency market goes through a period of high volatility, the dramatic drop in Yearn Finance’s YFI serves as a sharp reminder of the inherent unpredictability in the digital asset space. On the other hand, while the selling wave for altcoins has had a striking impact on the price, it is important to remember that a potential rally in the cryptocurrency market could mean a rapid increase for YFI, as it is known to show significant growth during rallies.
