Detailed analysis
1. The main driver: Adoption and V2 releases
The second version of Liquity was launched on May 19, adding important new features such as user-defined borrowing rates and support for multiple collaterals including WETH, rETH, and wstETH. The average interest rates stabilized around 3% (source). On May 20, the Chainlink CCIP protocol was integrated, allowing the BOLD stablecoin to operate across multiple networks such as Arbitrum, Base, and Optimism, enhancing cross-chain liquidity and increasing Total Value Locked (TVL). These updates align with the decentralized finance (DeFi) trend towards providing flexible and distributed loans, attracting more capital to the protocol.
2. Supporting factors:
Momentum of Bitcoin-backed stablecoins
On May 30, Bitcoin-backed stablecoins, such as BTD and USDaf, were launched, utilizing the Liquity model that does not rely on centralized governance, thus expanding the scope of the Liquity ecosystem. These protocols offer borrowing rates ranging from 4.2% to 7.1% against BTC collateral, making Liquity an innovative model in the field of decentralized stablecoins (Blockworks).
Although these developments are not directly related to the distribution of LQTY tokens, they have contributed to increased interest and speculation around the currency.
3. The artistic context:
Bounce from oversold conditions. The LQTY currency rebounded from a Fibonacci retracement level of 38.2% at $0.98, which is an important support level, after recording a weekly increase of 17.7%. The 14-day Relative Strength Index (RSI) at 49.79 indicates balanced momentum, while the MACD shows a bearish divergence (0.0317) with a slowdown in selling pressure.
The low trading volume over 24 hours (19.67) indicates weak liquidity that may amplify price movements, while market whales controlling 74.4% of the supply may have contributed to this rebound.
Summary
The rise in LQTY price is linked to the benefits of the second issuance, which include expansion through networks and the increasing use of Bitcoin-backed stablecoins, in addition to technical purchases at key support levels. While the updates strengthen the fundamentals, the low trading volume and technical divergence call for caution.
The question now is: Will the volatility driven by major investors (whales) continue, or can organic demand resulting from the expansion of the BOLD currency support the current momentum?
