Curve DAO Token (CRV) fell by a huge 24%, from $0.537 to $0.407. But as of right now, the price of CRV has come back from this big drop and is trading in the green. Experts think whales are planning a CRV short squeeze
What is Short Squeeze
Short squeeze is an unusual event that makes the price of a stock or cryptocurrency go up quickly.
For a short squeeze to happen, the stock or cryptocurrency must have an unusually high number of short sellers.
The short squeeze starts when the price suddenly goes up, which is not what the market was expecting.
The condition is a big sign that a lot of short sellers have decided to cut their losses and get out of their positions at the same time.
Whales plotting CRV Short Squeeze
Reports say that crypto whales sold a huge amount of CRV on exchanges. Whales used AAVE, the Open Source Liquidity Protocol, to borrow Curve DAO Tokens, which they then sold on the exchanges.
As the price of CRV went down, the whales borrowed more Curve DAO Token to sell on AAVE. This was done over and over again. When the CRV price went as low as it could go, these whales bought on CEX. This price point is thought to be about $0.40.
But now the whales are buying CRV on the exchanges to drive up its price. Crypto whales will let their positions in AAVE be sold off. Due to a lack of on-chain liquidity, the planned process for liquidating AAVE will drive up the price of CRV.
https://twitter.com/kamikaz_ETH/status/1595022764465094656
Curve DAO Token skyrockets
The expert said that this is where the CRV short squeeze has begun. The price level shows when the AAVE liquidation will hit a pump.
In the last 24 hours, the price of Curve DAO Tokens has jumped by 22%. At the time of this writing, the average price of CRV is $0.602. Its 24 hour trading volume is now $425 million, which is a huge increase of 733%.
According to data from DefiLlama, AAVE’s total value locked (TVL) has dropped by 4.84% in the last day. It is currently worth $3.86 billion. Its TVL, on the other hand, has dropped by 24% in the last month.
Famous Short Squeeze Incidents
Elsius’s token went up by more than 2,000% just a few months after the company filed for bankruptcy.
When most traders had bet on CEL token going down, a group of traders on social media saw an opportunity to hurt short sellers.
This group of short squeezers made short sellers cover their positions by buying back at a higher price.
In a famous incident that happened in January 2021, a group of traders on Reddit worked together to short squeeze the stock of video game company GameStop.
GameStop’s shares hit an all-time high of almost $500 when hundreds of thousands of individual traders bought and sold them. Before the rise, each share of GameStop stock was worth $17.25.
