Looking back at alpacas: When bad news becomes a temporary wealth code
ALPACA has (almost) ended its sinful life.Author: Deep Tide TechFlow
In recent days, the "Alpaca Coin" $ALPACA, which is about to be delisted from Binance, has been active on the market stage, stirring up over $10 billion in total trading volume with a circulating market cap of $30 million.
On April 24, Binance announced that it would delist four tokens, including Alpaca Finance ($ALPACA), on May 2.
The news of "delisting from Binance" is usually a huge negative for projects—delisting means reduced liquidity and shrinking trading volume, and token prices often fall sharply or even remain stagnant.
However, after the delisting news was released, $ALPACA experienced a drop of about 30% in a short time (based on Binance spot trading) but then skyrocketed nearly 12 times in three days, rising from $0.029 to a peak of $0.3477. Meanwhile, the open interest (OI) of $ALPACA far exceeded its token market cap by several times, and the "meat grinder" market of long and short positions around $ALPACA began.
Accelerated Rate Settlement, Intensified Long-Short Battle
Subsequently, Binance adjusted the funding rate rules, shortening the maximum rate settlement period to once every hour (up to 2%), further intensifying the fierce competition between long and short positions. Long positions not only profited from driving up the price but could also continuously "eat" high funding rates. The price of $ALPACA remained in high-level trading for nearly four days.
With an hourly settlement of -2% in rates, under the premise of 1x leverage, a short seller holding a short position for one day would at least lose 48% of their principal. Even with such a high rate, there were still funds rushing to short.
In the intense competition, some noticed that a trader with a million-dollar position was continuously shorting $ALPACA with high leverage, ultimately leading to a liquidation of millions of dollars in funds along with their followers.
On April 29, Binance raised the maximum contract rate for $ALPACA to ±4%. For short sellers, the increase in the maximum rate would double the cost of shorting, but instead of deterring short sellers, the price of $ALPACA plummeted unexpectedly, dropping from $0.27 to around $0.067.
There Are No Absolute Trading Rules
As trading volume and attention gradually shifted, the story of $ALPACA may come to a close.
Looking back at this billion-dollar farce, in some ways, the recent $ALPACA saga was a kind of Meme—drawing massive attention from the negative delisting news, allowing the principle of "black or red is still red" to be fully realized in price fluctuations. At the same time, with a relatively low circulating market cap (at one point less than $4 million) in a similar environment (top-tier exchanges), highly controlled chips, and wide price fluctuations that continuously stimulated players' nerves, even the image of "alpaca" could be associated with a Meme.
However, while the image may be cute, for those truly participating in the game, these days could only be described as "bloody."
With negative news leading to a frenzied price surge and "short squeeze" news causing a smooth decline, the complex price movements of $ALPACA over these days have overturned the usual "sell the news" logic and disrupted many people's positions.
Clearly, the boundaries between "good news" and "bad news" have gradually blurred, and the previously singular judgment logic is no longer applicable to the ever-evolving market. Instead, the violent manipulation of human psychology has become rampant, with continuously refreshing liquidation data gradually occupying the center of the market. Describing this evolutionary direction as "barbaric growth" may be quite fitting.
However, things have duality; while some feel confused, others feel excited. This farce is not necessarily a bad thing for everyone. For many participants seeking price volatility and possessing exceptional skills, the way the alpaca has moved could even be a long-awaited opportunity to make big profits.
There are also voices suggesting that the traders using followers' money to short without regard for costs represent a hunt for retail funds, just as the movie tagline states: "The gentry's money is returned in full, while the common people's money is split three to seven." The truth of these claims is hard to judge at the moment, but what is certain is that even if the reality is not so dark, the ultimate winners in this manipulation will not be ordinary users.
In the absence of adequate regulatory measures, $ALPACA may not be the last instance of wild manipulation in this market.
As of the completion of this writing, the price of $ALPACA is still fluctuating violently, and there may be more exciting "performances" before the official delisting.
In the tumultuous price battle, it is difficult for naive participants to find a safe haven. Under the hunt for attention and liquidity, perhaps the best strategy for retail investors is to watch less and act more. Seeing big news and abnormal price movements, those who feel "opportunity has arrived" are not just retail investors, but also project parties that have long been thirsty.
