The Alpaca Finance (ALPACA) token rallied by a surprising 1,300% within 24 hours to trade at $1.22 on Apr. 30 — its highest price since Sep. 4, 2021. Soon, its price collapsed more than 60% to as low as $0.443.
It all began when the Binance crypto exchange announced on Apr. 24 that it would delist spot trading pairs for four tokens, including ALPACA, on May 2.
The same day, the exchange announced it would increase the funding rate settlement frequency of ALPACA Perpetual Contract from every four hours to every two hours, capped at 2% negative or positive.
The funding rate is a periodic payment made between traders holding long and short positions in a perpetual futures contract to keep the contract’s price close to the spot price.
If the funding rate is positive, long traders pay short traders. If it’s negative, shorts pay longs.
Funding rate settlement frequency refers to how often the funding payments between long and short traders are exchanged.
On Apr. 25, Alpaca Finance announced on X that it had cancelled its token issuance for a market maker due to Binance delisting it.
ALPACA’s price began surging since Apr. 24 as short sellers began to hold their positions.
However, its recent astonishing surge had to do with the funding rate changing from -4% to +4% on Apr. 29.
As the funding rate turned positive, the market sentiment also turned bullish for the token. As the price began surging dramatically, short sellers began closing their positions. Meanwhile, long sellers held their positions and even opened new ones.
Within 24 hours, ALPACA’s total liquidation volume surpassed $55 million, of which short liquidations constituted $45 million.
The token’s 24-hour total liquidation volume exceeded even those of Bitcoin and Ethereum.
Alpaca Finance is a lending protocol allowing leveraged yield farming on Binance Smart Chain (BSC).
ALPACA is trading at $0.6948 at press time.
