In a staggering turn of events, Yearn Finance’s (YFI) price witnessed a major setback after surging 167% recently, as it plunged 43% within five hours. This steep decline wiped out almost five days of rapid gains, bringing the token’s value down from a high of $15,591 to $8,421, resulting in a loss of over $250 million in market capitalization.
The sudden and unexpected Yearn finance (YFI) shift has caused investors to lose confidence, and many are now bewildered by the situation. This turn of events has raised questions about the factors that contributed to the asset’s decline and what measures can be taken to mitigate similar occurrences in the future.
Speculation abounds regarding potential causes for the Yearn Finance crash, with some attributing it to a suspected exit scam by insiders. Concerns have been raised due to the concentration of nearly half of the Yearn Fiance supply in just ten wallets, including those belonging to prominent crypto exchanges.
Yearn Finance (YFI) Liquidations Hit $5M In 24 Hours
Data from Coinglass indicates over $5 million in liquidations within 24 hours, with YFI contract positions reaching a peak of $162 million before sharply declining. As traders make short positions on Yearn finance, the token’s open interest (OI) has surged significantly, reflecting a bearish sentiment in the market.
Source: Coinglass
The recent downturn has had an impact on the broader cryptocurrency market. Ethereum (ETH), XRP, Solana (SOL), and Cardano (ADA) – some of the major altcoins – have experienced a drop of approximately 3% in the last 24 hours. In addition, DeFi tokens have played a significant role in the market decline, pulling down the global market cap.
This plunge comes amid Bitcoin’s sideways movement, displaying no clear direction, while altcoins appear vulnerable to market fluctuations due to lower trading volumes during weekends. Analysts anticipate further pullbacks before a potential resurgence in altcoin investment, although the market has shed nearly $25 billion in the last two days.
The recent surge in cryptocurrency prices, primarily attributed to ETF approval anticipation, has hit a roadblock. Despite expectations for the ETF approval window from November 13 to 17, the SEC’s delay in making a decision signals a probable postponement until January 2024. Consequently, investors may capitalize on profits, potentially triggering a widespread market correction.
As uncertainty looms over the crypto market’s immediate future, investors are advised to tread cautiously amidst the ongoing volatility, especially with altcoins experiencing a considerable retreat after substantial gains.