Yearn finance YFI token experienced a startling drop, plunging over 43% within a mere five-hour period on November 18. This steep decline came as a shock, especially considering the token’s impressive rally of nearly 170% earlier in the month. Why did Yearn Finance crash? Is it a rug-pull in the making or simply a price adjustment?
Yearn Finance Crash: YFI Price Drops suddenly
The sudden fall in value led to over $300 million being erased from its market capitalization, a significant setback from its November gains. Current trading figures show the YFI token at a value of $9,178, down from around $14,000 just a day earlier. Despite this downturn, the token’s value is still reported to be up by 87% over the past 30 days, according to the latest data.
Why did Yearn Finance Crash?
The weekend following the drop was rife with fear, uncertainty, and doubt (FUD) among investors and enthusiasts. Discussions on platforms like X (previously known as Twitter) revealed concerns about a potential exit scam. Some users highlighted that nearly 50% of the YFI supply was concentrated in just 10 wallets, allegedly controlled by the developers. However, a review of Etherscan data suggests that these wallets might belong to cryptocurrency exchanges.
Will YFI reach 0$?
Amidst the turmoil, some users on X speculated that the initiation of short positions could have been a catalyst for the token’s rapid devaluation. Coinglass data indicated a surge in open interest for YFI, hinting at increased shorting activity following the token’s gains in November. One trader on the platform commented on buying the dip after a massive sell-off of 1000 coins, which might have contributed to the drastic price drop. Another user pointed out that the post-decline price behavior of YFI was atypical for exit scams, adding another layer of complexity to the situation.
What is Yearn Finance Crypto?
Yearn.finance, the platform behind the YFI token, is a decentralized finance (DeFi) protocol known for offering automated trading solutions in the DeFi markets. It was launched in July 2020 by Andre Cronje, an Ethereum developer and entrepreneur, and has since been a notable player in the DeFi space.