“There's a sh*tcoin apocalypse ongoing at the moment,” economist and trader Alex Kruger responded with when today, in a sudden move, Matic cryptocurrency lost more than 72% of its value.
The 80th largest cryptocurrency with a market cap of $53 million, Matic Network (MATIC) has been approaching it's all-time high (ATH) yesterday formally made on May 21, 2019, at $0.0450, in less than a month after its launch.
Around the last week of November, MATIC started climbing up and jumped a whopping 228%.
On Dec. 9, MATIC was trading at $0.0417 only to take a drop to $0.0116 today. At the time of writing, MATIC has been trading at $0.020.
MATIC has now released an official statement, clarifying that the team has no play in this significant drop in price.
Matic had NO role to play in all this.
For token movement, We announced the release of ~0.25% (248mn) tokens as Oct unlock, which coincides with aggregated outward movement.
Foundation tokens are still there.https://t.co/BhDDqFWF6H
MATIC will bounce back stronger than ever!
— Matic (@maticnetwork) December 10, 2019
The company says they already announced the release of about 2.5% tokens in its late October post. The outward movement of ~2.7% tokens, it says are still at this address.
As Matic started falling, Samuel JJ Gosling of Validity, a self-governing cryptocurrency evaluation platform took to Twitter to say the Matic team has sent 15% of MATIC supply for liquidation at Binance. This led people to start calling Matic network a “scam”.
To handle the situation, Binance CEO then clarified that the MATIC team has nothing to do with it.
Our team is still investigating the data, but it's already clear that the MATIC team has nothing to do with it. A number of big traders panicked, causing a cycle. Going to be a tough call on how much an exchange should interfere with people's trading. https://t.co/wOVF6tEBkQ
— CZ Binance (@cz_binance) December 10, 2019
Matic was the fourth token sale to take place on Binance Launchpad and the first one to use lottery format. Coinbase Ventures was also an investor in the project’s seed round.
It is a Layer 2 scaling solution that uses sidechains for scalable and secure transactions. It allows users to create faster decentralized applications (DApps) and improve the overall user experience.
No Villain Just a Norm
With this insane drop in price, MATIC has completed a full market cycle in less than 24 hours for which most altcoins having been taking two years and counting, stated trader Hsaka.
However, small-cap coins aren’t the only ones that can experience such a crash, large-cap coins are just as much vulnerable to these incidents as small-cap ones.
Kruger stated that this collapse in MATIC price can happen to any token and though it would be “surprising” to happen with large market cap coins, even that is possible. He added,
“Adjust selling volume by market cap or order book liquidity and presto. Hence why crypto is Traders’ Paradise, Investors’ Hell.”
$MATIC with a MCAP of 90 million, dropped 71% in two hours because some whale decided to cash out. Now imagine what this would look like on your sub 10 million MCAP shitcoin. Would probably do the same in 1/4 the time. Don’t be naive thinking the whales “wont sell” your shitcoin.
— Credible Crypto (@CredibleCrypto) December 10, 2019
But for those looking for someone behind this dump, trader Cantering Clark has this to say to them,
“No one needs to be behind the MATIC dump. People need a villain. The dump was the perfect example of the domino effect of staggered stop orders. Liquidity evaporates and this is what you get. Stock market has flash crashes every so often. In crypto it’s the norm.”
$MATIC just lost 67% of its value in only 30 mins. If you're wondering why liquidity matters, well, there you go…
— Ceteris Paribus (@ceterispar1bus) December 10, 2019
Around 300k $matic shorted in a 1 minute candle right before the dump on FTX.
Matic was toppy so it's not damning, but it stands out. If you were to, through a hack/exploit, gain control of a majority of matic.. a way to profit would be to short heavy on FTX and dump on binance. pic.twitter.com/ryjOexcULB
— Gainzy Claus (@CryptoGainz1) December 10, 2019
Trader Scott Melker meanwhile notes that this could be because of high leverage trading of illiquid assets which “can cause a cascade of liquidations and stop losses fueling an epic drop.”
The best approach in the crypto market, Melker says is “don’t become an investor when it’s avoidable” and “learn to take profit,” because this time the alt seasons might be just of 10-50%.