MATIC collapses by 70 percent in less than an hour and the rest of the crypto market also underperformed due to lack of liquidity. If you add margin trading to this, the potential of massive cascades in price increases as holders of the altcoin has just been found out as we are reading in the latest altcoin news.
Matic collapses a whopping 70 percent and the collapse sent the token from $0.042 to $0.012 SATS in an instant and left the holders of the token confused. The crypto twitter community speculated on the reasons why this happened to the altcoin that was up by 200 percent this month. Binance seems to be where the carnage happened and has the entire volume as well and one plausible explanation was proposed by the crypto analyst ‘’Stillman’’:
“They did a shitcoin airdrop today, then the usual sell the news happened but for the first time we had margin trading on an illiquid Binance book in place to cause a cascade.”
The MATIC network was one of the binance initial exchange offerings and it seems that the exchange can inadvertently take life as well as inject it into the altcoin itself. According to announcements, it was pitched to be the next greatest thing in blockchain by offering the layer 2 scaling solution that achieves scale by utilizing sidechains for the off-chain computation. Right now, the token price is scaling rapidly in the wrong direction.
Another theory for the collapse is that a few MATIC addresses hold about 99 percent of the supply which could lead to massive manipulation if there is a coordinated liquidation. In terms of market cap, the amount dumped equates to more than $60 million some of the other theories include that there is a massive pump and dump, at least according to crypto trader ‘’Welson’’
“This is why it’s never a good idea to FOMO into a shitcoin, especially when the owners have 90% of the supply. Once they’ve manipulated prices to a high level, they will sell everything and have the buyers be left holding the coins for life.”
The crypto guru Willi Woo stated that 99 percent of the current altcoins on the markets have virtually zero liquidity. For an asset to be tradable it has to have daily volume. MATIC is not the only token that crashed at the moment and the big dump seems to have hit some of the other illiquid cryptocurrencies including Ravencoin and Energi.
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Stefan has been writing articles for DCForecasts since 2016 in-house full time. As one of our main cryptocurrency writers, he focuses on covering the latest cryptocurrency news, technical charts, price analyses of coins and press releases. When he is not exploring and covering the latest topics in crypto, you can find Stefan playing basketball, tennis or cycling.
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