Delisting will not fall but rise? Unveiling the capital "short-squeezing script" behind ALPACA

Author: Fairy, ChainCatcher

Edited by: TB, ChainCatcher

"Delisting bomb" turns into a "wealth rocket"?

On April 24, Binance announced that it would remove the ALPACA token. According to common sense, what is waiting for ALPACA should be selling, panic and plunge. However, ALPACA has become abnormal, with an increase of more than 650% since the announcement was released.

Is such a bizarre rebound a "return to the project" or a foreshadowing that capital players have long laid? Behind this sudden rush, there may be a storm...

Source: coingecko

The countdown to delisting becomes the "empty kill" moment

On April 10, Binance started the second batch of voting and coin deposit activities. The results were announced a week later, and ALPACA ranked seventh among the 17 candidates, and the delisting crisis began to emerge. On April 24, Binance officially announced that it will remove ALPACA on May 2 and will clear the perpetual contract on April 30. As soon as the news came out, the price of ALPACA plummeted from US$0.0329 to US$0.029, and its market value shrank to US$5 million.

Just when the market generally believed that ALPACA would be in a slump, a dramatic scene occurred: the price rose from US$0.029 to US$0.0857 in one hour, an increase of up to 195%. This sudden surge caught the bears off guard and laid the groundwork for the crazier trend in the future.

On April 25, Alpaca Finance officially issued an article saying that due to the transaction volume exceeding 1 billion, market makers requested additional tokens to maintain liquidity, but canceled the plan after the community objected. This change undoubtedly hit the Air Force again.

Therefore, on April 26, ALPACA's liquidated positions even exceeded Bitcoin, and the short position was mainly liquidated. The entire market seems to have become a "precise harvest battle" against bears.

Source: Coinglass

********" Short-squeezing script"

Regarding ALPACA's rebound, He Yi said that this may be a quick return on shell investors through short-term trading. Based on the analysis of community users @LuBtc888, @0x_ooorange, and @Mumu_yay, we have sorted out a complete set of "short-squeezing scripts":

1. Layout in advance before delisting

Before the delisting announcement is issued, the "banker" may have learned or noticed an abnormality in advance, and there is suspected fund-absorbing action around April 19. During this period, the trading volume of ALPACA on Binance increased significantly, but the price increase was extremely limited.

2. Create misalignment of expectations, and a "bad trap" appears

The market generally expects "delisting = plunge", retail investors and short-term speculators are collectively bearish, short orders are pouring in, and the open positions of ALPACA contracts soar. The "market maker" took advantage of the situation to absorb funds at a low level, and built large-scale long positions at the bottom, and then raised spot prices, triggering a series of short orders and breached a series of short positions.

3. Changes in rules speed up the pace of short squeeze

Binance recently shortened the cash rate collection cycle from 8 hours to 1 hour, and the ALPACA fund rate once fell to -2%. The short sellers not only bear the risk of liquidation, but also have to pay high "interest" every hour, and have to accelerate the closing of positions, resulting in accelerated short squeeze and the speed of pulling the market quickly accelerated.

4. The main profit model

Spot market: Avoid chips at low prices in the panic of delisting, and pulling the market creates the illusion of "returning back", attracting retail investors to chase high prices and then ship at high prices.

Contract market: Hold huge long positions, continuously charge interest paid by short positions through negative fee mechanisms, and achieve two-way profits.

ALPACA 's future market suspense

Market opinions differ on ALPACA's future market trend. @Mumu_yay believes that the delisting announcement will trigger the liquidation mechanism, which means that the positions of both long and short parties will be automatically liquidated. In this case, the "banker" does not need to worry about how to find exit liquidity, just stand by side at a high level and wait for the liquidation to trigger.

However, the crypto KOL Kuang Ren crazy people say that the trend holds a different view. He believes that from the perspective of game, the dealer will choose to gradually establish long positions at the high point, and then open short positions on the backhand to smash the spot market, and ultimately maximize profits through liquidation. Therefore, he concluded that ALPACA's trend would plummet.

In addition, trader @thankUcrypto pointed out that under normal circumstances, pulling the market before taking off the shelves will also smash the market before taking off the shelves. As the platform with the strongest liquidity in the market, if Binance does not perform a market-smash operation before delisting on May 2, then market makers can only wait until they are delisted and smash the market on other exchanges. However, the depth and insufficient buying of other platforms mean that the profits of smashing the market will be greatly reduced.

The storm has not stopped, the future is difficult to predict

As the delisting date on May 2 approaches, the fate of ALPACA is still undecided. Its rise and fall trajectory has also become a typical microcosm of capital games in the crypto market. The market is always in a cycle, and perhaps new "ALPACA" will continue to appear in the future, and similar scripts will be staged in different aspects.

In the stormy waves, reason is always the only reliable anchor for investors. In the face of short-term emotions and temptations, only by staying awake and keeping your eyes open can you avoid losing your way in the hustle and bustle. Stay away from high-risk currencies that lack fundamental support and be wary of the undercurrents of trading and controlling the market. Only a steady helmsman can stay away from the reefs when sailing in the sea.