Alpaca Finance has taken the cryptocurrency market by surprise, experiencing a staggering 1,100% price surge over the past week despite an impending delisting from Binance.

Binance’s Delisting Announcement

On April 24, Binance announced that it would delist ALPACA and three other tokens following a routine evaluation. The decision was attributed to factors such as low trading volume and developer inactivity. The delisting process involves disabling ALPACA spot trading pairs on May 2, with deposits and withdrawals phased out shortly after the announcement.

Contrary Market Reaction

Typically, token prices decline after delisting announcements, but ALPACA defied expectations. After a brief dip, the token surged as much as 2,300% within days, climbing from $0.029 to a peak of $1.47—a 60x increase on certain trading pairs. As of now, ALPACA trades at $0.53, which represents a 40% drop in 24 hours but still marks an impressive 1,100% gain over the past week.

Short Squeeze Drives the Rally

The unexpected price surge appears to have been fueled by a short squeeze. Following the delisting announcement, many traders opened short positions, betting on a price collapse. However, when ALPACA’s price surged instead, these traders were forced to buy back the token to cover their losses, further driving the price upward.

Binance’s Funding Rate Adjustments

Binance’s modifications to funding rates added to the volatility. The exchange increased the funding cap from ±2% to ±4% and reduced settlement intervals from four hours to one hour. These changes raised the costs and risks associated with holding bearish positions, making it increasingly expensive for short sellers to maintain their stance.

Supply Shock Intensifies Price Movement

The ALPACA rally was compounded by a supply shock. The Alpaca Finance team halted new token issuance and burned approximately 35 million tokens, equivalent to 18.6% of the maximum supply. This sudden reduction in circulating tokens tightened the supply, amplifying the price increase.

Speculation Around Market Manipulation

Some on-chain analysts suspect that market manipulation may have played a role in ALPACA’s sudden rise. Over $50 million in positions were liquidated during the price spike, including $43 million from short sellers. Coordinated whale activity is believed to have contributed to the surge, catching leveraged traders off guard.

“This situation has been compared to the Gamestop short squeeze of 2021, where institutional short sellers were outmaneuvered by retail traders.”

Future Uncertainty

Despite the dramatic price increase, concerns remain about ALPACA’s sustainability. With Binance’s final delisting approaching, investors are left wondering whether the token can maintain its current momentum or if it will face another significant price correction.

For those exploring the cryptocurrency space, staying informed about market trends is crucial. Understanding factors such as delisting impacts, supply shocks, and funding rate adjustments can help navigate volatile markets effectively.

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