EyeOnChain
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Bearish
The $ALPACA Trap: How a Delisting Turned Into a $3B Liquidation Carnival
It started like any other token delisting.
On April 24, Binance announced the removal of four low-liquidity assets—including $ALPACA. The token, expected to fade into irrelevance, instead exploded, surging 150% within hours. That alone caught the eye of short sellers—after all, who would seriously buy a token on its way out?
Then came April 25. #ALPACA surged another 175%, only to be slammed down again. Binance quietly adjusted the funding rate calculation from every 4 hours, to 2, then 1. Shorts piled in, believing this was a classic “dead cat bounce.” But the bounce wasn’t dead. It was bait.
By April 29, funding rates were raised to 4% per hour—an insane figure that all but guaranteed pressure on short sellers to exit or be wiped out. And on April 30, ALPACA soared to an all-time high. Liquidations in just 4 hours topped the entire network. The open interest reached $110 million, with a 24-hour volume of $3 billion.
Behind the scenes, the project team held no tokens. Market makers dumped their allocations right after the delisting notice. Who held ALPACA now? Mostly one entity—likely the “shell owner,” or someone aligned. They weren't trying to sell. They were hunting.
The market maker had built a perfect trap: use the delisting to spark panic, run up the price to lure shorts, let the high funding rate churn them, and then harvest liquidations as price kept rising. They didn’t need to sell to profit—just push the price and watch the shorts implode.
The irony? What was meant to be a cleanup operation to protect users from “bad” tokens turned into a sophisticated liquidation scheme. A coin no one wanted became a money printer—not because of fundamentals, but because of systemic blind spots.
If there's a lesson here, it’s this: shorting is never “free money.” While long positions cap your loss, shorts come with infinite risk. And when the rules shift mid-game, even a smart trader can get swept away.
This wasn’t just a pump.
It started like any other token delisting.
On April 24, Binance announced the removal of four low-liquidity assets—including $ALPACA. The token, expected to fade into irrelevance, instead exploded, surging 150% within hours. That alone caught the eye of short sellers—after all, who would seriously buy a token on its way out?
Then came April 25. #ALPACA surged another 175%, only to be slammed down again. Binance quietly adjusted the funding rate calculation from every 4 hours, to 2, then 1. Shorts piled in, believing this was a classic “dead cat bounce.” But the bounce wasn’t dead. It was bait.
By April 29, funding rates were raised to 4% per hour—an insane figure that all but guaranteed pressure on short sellers to exit or be wiped out. And on April 30, ALPACA soared to an all-time high. Liquidations in just 4 hours topped the entire network. The open interest reached $110 million, with a 24-hour volume of $3 billion.
Behind the scenes, the project team held no tokens. Market makers dumped their allocations right after the delisting notice. Who held ALPACA now? Mostly one entity—likely the “shell owner,” or someone aligned. They weren't trying to sell. They were hunting.
The market maker had built a perfect trap: use the delisting to spark panic, run up the price to lure shorts, let the high funding rate churn them, and then harvest liquidations as price kept rising. They didn’t need to sell to profit—just push the price and watch the shorts implode.
The irony? What was meant to be a cleanup operation to protect users from “bad” tokens turned into a sophisticated liquidation scheme. A coin no one wanted became a money printer—not because of fundamentals, but because of systemic blind spots.
If there's a lesson here, it’s this: shorting is never “free money.” While long positions cap your loss, shorts come with infinite risk. And when the rules shift mid-game, even a smart trader can get swept away.
This wasn’t just a pump.
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