ALPACA Token Surges Despite Binance Delisting
Alpaca Finance’s ALPACA token defied expectations by soaring 1,100% in a week, despite Binance’s delisting announcement. binance plans to remove ALPACA and three other tokens on May 2 due to low trading volume and developer inactivity.
Typically, delisting news causes token prices to fall. However, ALPACA’s value skyrocketed from $0.029 to a peak of $1.47, a 60x increase. This unexpected rally followed Binance’s April 24 decision to delist the token. The exchange cited low trading volume and developer inactivity as reasons for the delisting.Deposits and withdrawals were phased out after the announcement, with spot trading pairs set to end on May 2.
ALPACA’s price surged by up to 2,300% in a few days, reaching $1.47. It now trades at $0.53, down 40% in 24 hours but still up 1,100% over the week. the surge was driven by a short squeeze. Traders who bet against the token were caught off guard when its price spiked. they had to buy back the token to cover losses, further fueling the price rise. Binance’s funding rate changes also played a role. The funding cap increased from ±2% to ±4%, and settlement intervals shortened from four hours to one hour.This made it costly for short sellers, who expected a price drop. The team’s actions also contributed. They halted new token issuance and burned 35 million tokens, tightening supply.This move, combined with the funding rate changes, made short positions expensive.The token’s supply shock and funding rate adjustments created a perfect storm for short sellers.
Some suspect market manipulation. Over $50 million in positions, including $43 million from short sellers, were liquidated. The situation is reminiscent of the GameStop short squeeze in 2021. The delisting news initially caused a brief decline, but the token’s value then skyrocketed. The team’s decision to suspend new issuance and burn 18.6% of the maximum supply, tightening the squeeze. The rally’s longevity is uncertain. The delisting could lead to a price drop. Traders must stay cautious as the delisting looms. The situation is similar to the GameStop short squeeze in 2021. Retail traders outbid institutional short sellers, making it a high-risk investment.
