The popular Decentralized Finance (DeFi) governance token, Yearn.finance’s YFI, took a dark turn as it sharply declined over 43% within a five-hour interval on November 18. This price tumble came as a shock to many, as it followed the token’s nearly 170% surge during the early part of November.
The sudden sell-off sadly wiped out over $300 million in market capitalization, undoing a considerable part of November’s gains, as per the data from CoinMarketCap. The YFI token, which was trading at $14,185 a day before, slid down to hit the $9,069 mark. Nevertheless, it’s noteworthy that the token still manages to boast an overall growth of 83% for the past 30 days.
This has been an unsettling weekend for the crypto community that is riddled with fear, uncertainty, and doubt, commonly termed as FUD. On X (previously known as Twitter), several users circulated rumors that a whopping 50% of the token supply was being held in merely 10 wallets, supposedly controlled by the developers. However, data from Etherscan throws doubt on this speculation, suggesting that some of the holders might, in fact, be crypto exchange wallets.
Many X users believe that the sudden surge in short positions might have precipitated this collapse. Coinglass data supports this theory as it indicates a steep rise in YFI’s open interest, thus implying that traders have taken to shorting the coin following its November ascension.
One X user’s comment sums up the mixed reception from the trading community, “I bought the dip… someone sold 1000 coins perhaps that’s why it dropped massively. Will see.” Another user argued that the post-decline price behaviour of YFI does not match the typical patterns observed during exit scams, stating, “Doesn’t look like rugpull at all. Cuz inspite if so much sell off price is still stable at 9k which is 80% above its bottom.”
Yearn.finance is a well-known DeFi protocol that offers automated trading solutions to DeFi markets. It was founded by Ethereum developer and entrepreneur, Andre Cronje, back in July 2020.