Binance Delists ALPACA, Leading to Price Roller Coaster: Bottom Fishing or Being Cut?

On this day, Binance announced it would delist ALPACA and three other tokens on May 2, citing that these tokens did not meet the platform's standards for trading liquidity, network security, and community transparency. Following the announcement, the price of ALPACA plummeted, hitting a low of 0.029 USDT, with a drop of 10.38% within 15 minutes. However, several hours later, its price skyrocketed to 0.085 USDT, with a surge of 93.16% within an hour. Behind this market movement, is it a case of short-selling strategies failing, or a market maker's explosive rally?

As the world's largest cryptocurrency exchange, Binance's delisting decision has a significant impact. As early as the community vote from April 10 to 16, ALPACA was ranked sixth on the high-risk token list with 6.3% of the 'delist votes'. The delisting announcement on April 24 triggered market panic. The price of ALPACA quickly dropped from 0.0329 USDT to 0.029 USDT, with a market cap shrinking to approximately 5.9 million USD. But soon after, the price rebounded sharply, skyrocketing from 0.029 USDT to 0.075 USDT within an hour, an increase of 87.16%, peaking at 0.085 USDT, with a 24-hour trading volume surging to 70.77 million USD, twelve times its market cap.

ALPACA is the native token of Alpaca Finance, a DeFi protocol that allows users to leverage yield farming. Launched in March 2021 under a 'fair launch' model, its price has dropped from an all-time high of 8.60 USDT to the current 0.04887 USDT, representing a decline of 99.43%. Low market cap, high volatility, and futures trading support make it a paradise for speculators. After the delisting news broke, the low price attracted many speculators. Some users believe its low market cap leaves little room for further declines, and high trading volume makes it prone to volatility. Others pointed out that the futures open interest is high relative to the market cap, suggesting possible involvement from speculative capital or institutions.

There are several possible reasons for this surge. First, it could be market overcorrection and natural rebound; the panic selling triggered by the delisting led to an undervaluation of the price, prompting traders to bottom fish and push prices back up. This pattern is common among low market cap tokens. Second, it could be a market maker's explosive counterattack; market makers could use the panic to create a low point, make large purchases to drive up the price, and through a short squeeze effect, force shorts to cover, pushing the price higher. Third, it might be driven by retail FOMO; retail investors in the crypto market are easily influenced by FOMO sentiment and tend to buy in when they see prices rising.