ALPACA, a meme coin, unexpectedly received news of being delisted from Binance. The market panicked, and news spread like wildfire: “It's dead!”, “Sell quickly before it's too late!”. The price of ALPACA plummeted, the order book on Binance was as thin as paper, and everyone rushed to cut losses. But then, something unexpected happened: ALPACA surged, rising 10 times in just one day.
What happened?
Panic selling drained supply.
Those with weak nerves sold everything. The remaining ones either didn't want to sell at a loss or decided to “fight until the end”. The sell orders were empty; to buy, one had to pay a high price.
Small buying pressure caused a domino effect.
A group of investors or small funds jumped in to 'catch the bottom', injecting a bit of money. Due to the lack of selling pressure, the price instantly skyrocketed, catching short sellers off guard.
Short squeeze – the price of confidence.
Many traders thought delisting meant 'to zero', so they aggressively shorted. But when the price rose, they were forced to buy back at a high price to cut losses. This buying pressure pushed the price even higher, creating a whirlwind that burned both long and short positions.
FOMO exploded.
Those who once looked down on ALPACA now rushed to buy like moths to a flame, fearing they would miss out. FOMO was the final spark that ignited the price explosion.
What lesson can be learned?
Bad news doesn’t necessarily collapse the market. The emotional reaction of the crowd creates irrational volatility. If you only read the headlines and act immediately, you will always be slower than those who understand the market psychology. Have you ever seen a 'dying' coin rise 10 times?
