Curve walks on eggshells in light of the OTC deals; is CRV in trouble?
- DWF Labs recently moved 2 million CRVs to an exchange.
- Negative CRV sentiment continues as prices continue to slide.
The Curve [CRV] episode’s potential impact on the DeFi sector garnered increased attention for the project. While the situation appeared to be managed, concerns lingered regarding potential negative effects on CRV.
These concerns stemmed from certain measures taken to prevent its decline when the platform was hacked weeks ago.
– How much are 1,10,100 CRVs worth today
DWF Labs moves Curve to Binance
In a recent statement by Andrei Grachev, the leader of DWF Labs, revealed that he had transferred a significant amount of CRV to Binance. He clarified that he had sent 2 million CRVs to the exchange and might send additional amounts.
He emphasized that these tokens were not intended for liquidation but for trading purposes.
Sent 2m $CRV on Binance, and, will probably send more. Not for liquidation purposes (it would be dumb to sell it now), but for trading needs.
When we’ve done our plan, we will withdraw $CRV back to onchain
Cheers and enjoy rollercoaster ? pic.twitter.com/Kdds4DQrP6
— Andrei Grachev (@ag_dwf) August 22, 2023
A backstory to the Curve post
Andrei Grachev’s post mentioned above was prompted by speculations surrounding the purpose behind DWF’s transfer of CRV to Binance. Rumors were circulating about potential market manipulation, which led to the necessity of providing clarification.
Grachev himself played a role as one of the parties involved in an over-the-counter (OTC) arrangement with Michael Egorov. This arrangement was made in response to challenges arising from Egorov’s debt position after the hack incident.
Following a string of exploits targeting multiple pools within the Curve Finance decentralized exchange, the value of CRV experienced a sharp decline. Consequently, this decline exerted significant pressure on Egorov’s position.
Egorov had a substantial outstanding debt, over $110 million, spread across several DeFi protocols. CRV was utilized as collateral for these loans, exposing it to liquidation risk.
Furthermore, Egorov engaged in a series of over-the-counter transactions to avert the liquidation of his position. Some parties involved in these OTC transactions reportedly included Justin Sun, Jeffrey Huang, and DWF Labs.
Here lies the problem
While Egorov managed to gather enough stablecoins by selling on the Curve platform to cover his positions, this action introduced an additional element of risk. Speculation arose regarding the approximate six-month lock-up period associated with the over-the-counter (OTC) sales. However, there were no clear indications of how this lock-up period would be enforced.
This situation raised the concern that if any parties chose to sell their CRV holdings, a significant decline in CRV’s value might ensue. Furthermore, assuming each counterparty adheres to the waiting period, how the sales would occur after this period remained uncertain.
This scenario implied a potential for a substantial sell-off once the waiting period concluded, leading to a considerable adverse impact on CRV’s value. Consequently, the fate of the CRV token seemed to be influenced by these counterparties, which posed challenges to the token’s prospects.
A negative Curve
The decrease in the Curve token’s price and the prevailing uncertainty appeared to have influenced the overall market sentiment. According to data from Coinglass, CRV has been consistently encountering negative funding rates over recent days.
By 22 August, the weighted funding rate had fallen to -0.04. However, there was a minor improvement at the time of writing, with the weighted funding rate slightly increasing to 0.0006.
This trend suggested that, on the whole, traders were predominantly adopting short positions, indicating their bets on the token’s price decline.
CRV continues to slide
Analyzing the daily timeframe chart of Curve revealed a temporary pause in its decline on 18 and 19 August. Nonetheless, the downtrend persisted as the previous upward momentum proved unsustainable.
As of this writing, CRV was trading at approximately $0.4, signifying a decrease of over 1% in value. This prolonged decrease in price has now driven the token into the oversold zone according to its Relative Strength Index (RSI).
– Read Curve DAO (CRV) Price Prediction 2023-24
The situation with Curve is distinctive and marked by its uniqueness, and the unfolding events are still ongoing. The narrative surrounding Curve continues to be eventful and remains unresolved.