{"id":87387,"date":"2020-10-12T17:54:32","date_gmt":"2020-10-12T14:54:32","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/defi-traders-blame-yfi-price-collapse-on-shorting-by-alameda-research\/"},"modified":"2020-10-12T17:54:32","modified_gmt":"2020-10-12T14:54:32","slug":"defi-traders-blame-yfi-price-collapse-on-shorting-by-alameda-research","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/defi-traders-blame-yfi-price-collapse-on-shorting-by-alameda-research\/","title":{"rendered":"# DeFi traders blame YFI price collapse on shorting by Alameda Research"},"content":{"rendered":"

“# DeFi traders blame YFI price collapse on shorting by Alameda Research <\/strong>”<\/p>\n

Yearn Finance (YFI<\/a>) price has been in a serious rut during the past 2 weeks and many in the crypto community blame the sharp correction on Sam Bankman-Fried (SBF), the CEO of Alameda Research and FTX.\u00a0<\/p>\n

In the past month, DeFi giant Yearn.finance\u2019s native token YFI dropped 62.7% from $43,970 to $16,360.<\/p>\n

As Cointelegraph has reported, the majority of DeFi tokens corrected 40%-60% in September and this sell off took place as Bitcoin and Ether (ETH) prices also dropped. <\/p>\n

In the past 40 days, the price of Ether declined from $488 to $372, dropping to as low as $308. This weakness in the top-ranked altcoin by market cap further amplified the downturn of DeFi tokens.<\/p>\n

YFI\/USDT daily chart. Source: <\/em>TradingView.com<\/em><\/a><\/figcaption><\/figure>\n

Why is Alameda shorting YFI?<\/strong><\/p>\n

Throughout the past week, various reports emerged that Alameda Research has a short position on YFI.<\/p>\n

Alameda, which describes itself as a quant trading firm, is recognized as one of the most successful crypto trading firms. In November 2019, Bloomberg reported<\/a> that Alameda facilitates 5% of the cryptocurrency market volume, trading up to $1 billion daily.<\/p>\n

On Oct. 11, SBF confirmed on social media<\/a> that Alameda does have a short position on YFI. But, SBF emphasized that it did not crash the price of YFI. <\/p>\n

According to SBF, Alameda placed a net 200 YFI short position. It is equivalent to around $3.28 million at a price of $16,400. Yet, the exchange executive said it was not enough to crash the price of YFI. He said<\/a>:<\/p>\n

“SBF borrowed YFI which destroyed its price, he sold it on Binance and other exchanges – only once he was caught, did YFI go back up\u2019 False. 200 net YFI short over days does *not* destroy it! This is just off by an order of magnitude. The impact wasn’t huge.\u201d<\/p><\/blockquote>\n

SBF also added that the YFI he \u201cborrowed\u201d on Cream, a DeFi protocol, was not used to short the cryptocurrency. <\/p>\n

Much of the negative sentiment around SBF\u2019s YFI short came from the speculation that he borrowed YFI to short it. <\/p>\n

Bankman-Fried denied the speculations and explained that \u201cmost of the YFI was borrowed for liquidity and farming, not selling or shorting.\u201d<\/p>\n

For a firm in the size of Alameda, a $3.28 million position is likely a hedge against the market. <\/p>\n

In the past week, Bitcoin and Ether have increased substantially while DeFi tokens were flat across the board.<\/p>\n

Due to the trend of major cryptocurrencies outperforming smaller DeFi tokens, the YFI short could be a short-term hedge.<\/p>\n

Is YFI\u2019s mega rally over?<\/strong><\/p>\n

YFI\u2019s price is still down significantly from its peak of $43,966 but this doesn\u2019t mean the project lacks strong fundamentals. Currently the team is preparing to launch its Yearn v2 Vaults, a major upgrade to its popular vaults. Once active, the vaults will allow DeFi users to earn yields by staking their tokens in the vaults.<\/p>\n

According to Stats.finance<\/a>, around $813 million worth of capital is locked in Yearn vaults as of Oct. 12.<\/p>\n

Despite the upcoming product launch, the recent controversy involving former YFI supporter Blue Kirby<\/a>, and the prolonged downturn in YFI price have some traders cautious about the future of the project.<\/p>\n<\/div>\n