Yearn.finance’s governance token experienced a tumultuous ride on November 18, plunging by more than 43% within a mere five hours.
This drastic downturn followed a remarkable surge of nearly 170% earlier in the month, sparking concerns of a potential exit scam.
Data from CoinMarketCap revealed that this sharp decline resulted in the erasure of over $300 million in market capitalization, effectively wiping out the gains made in November.
Presently, the YFI token is valued at $9,069, down from $14,185 just a day prior.
Nevertheless, it’s worth noting that the token remains 83% higher in value compared to its position 30 days ago.
The sudden sell-off instilled a sense of fear, uncertainty, and doubt (FUD) within the cryptocurrency community over the weekend.
Speculation on X (formerly Twitter) raised suspicions, with some users suggesting that 50% of the token supply resided in 10 wallets controlled by developers.
However, data from Etherscan hinted that some of these holders might actually be crypto exchange wallets.
Furthermore, some X users pointed out that the plunge might have been triggered by an influx of short positions.
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Coinglass data indicated a surge in YFI open interest, implying that traders were betting against the coin following its substantial gains in November.
One trader on X commented, “I bought the dip… someone sold 1000 coins perhaps that’s why it dropped massively.
Will see.” Another user noted that YFI’s price movement after the decline appeared atypical for an exit scam, stating, “Doesn’t look like a rug pull at all.
Because despite so much sell-off, the price is still stable at 9k, which is 80% above its bottom.”
Yearn.finance, founded by Ethereum developer and entrepreneur Andre Cronje in July 2020, is a decentralized finance protocol that offers automated trading solutions for the DeFi market.
Despite attempts to reach out to Cronje and Yearn.finance for comment, Cointelegraph did not receive an immediate response.
In conclusion, the rollercoaster ride of Yearn.finance’s governance token has left the crypto community on edge, with suspicions of a possible exit scam amidst a backdrop of market volatility.
The situation underscores the inherent risks associated with investing in the cryptocurrency space.
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