Increasing Bar Graph Made of Green Colored Drinking Straws Front View.
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The crypto market is a sea of green on Tuesday, with alternative cryptocurrencies or altcoins, leading bitcoin and ether higher.
WAVES a token offered as a reward for processing blocks on the decentralized, open-source blockchain Waves, traded at $9.08 at 08:22 EST, representing a 60% gain on a 24-hour basis to lead the markets. And that’s not all. Forbes leaderboard shows the token traded above $10 early today, marking a 129% gain in two days.
Other notable winners like Cardano (ADA), Aave (AAVE) and Enjin Coin (ENJ) also flashed double-digit gains, ranging between 25% to 10% and outperformed bitcoin and ether, which gained 3% and 4%, respectively.
Altcoins can be seen as leveraged plays on bitcoin, the biggest and the most liquid cryptocurrency and seem to be drawing strength from the leading cryptocurrency’s price bounce. Altcoins typically outperform bitcoin when the latter is trading higher and is expected to continue gaining ground. Bitcoin jumped over 7.5% Monday, registering its biggest single-day gain since early March, as rates traders priced slower Federal Reserve rate hikes. Per technical charts, the cryptocurrency is likely to extend gains to $35,000 in the short term.
However, while most cryptocurrencies are benefitting from bitcoin’s price rise, the old luna token, known as luna classic (LUNC), remains under pressure. The token is trading 22% lower at $0.000112 at press time. Terra’s ecosystem crashed early this month, with LUNA and the flagship UST stablecoin falling to zero in a case of a crypto bank run.
WAVES’ outperformance could be attributed to several factors , including a recent oversold status. The token along with other coins like ADA, took a beating in the past eight weeks, falling as low as 90% from their respective record highs as bitcoin slipped from $48,000 to $25,338. WAVES crashed from the record high of $63 to $4 – a 93% slide and is still down 85% from its peak reached in March. The sell-off began in early April after USDN, the dollar-pegged decentralized stablecoin of the Waves ecosystem, lost its peg, crashing to $0.64. The de-pegging happened after pseudonymous crypto investor 0xHamZ and other influential Twitter handles called the protocol the biggest Ponzi in crypto, accusing founders of manipulating WAVES’ price.
According to CK Cheung, Investment Analyst at Defiance Capital, Waves founder Sasha Ivanov’s DeFi revival plan appears to have galvanized interest in the cryptocurrency. “The founder’s plan to restore the peg of USDN is seen as a bullish catalyst [for WAVES token],” Cheung said.
The move higher in WAVES on the back of the revival plan appears consistent with the recent irrational investor tendency to pour money into the relaunch of failed or crashed protocols. For instance, Terra, which crashed earlier this month, wiping out $40 billion in investor wealth, launched a new blockchain on Saturday. The Terra 2.0 went live with a new LUNA airdrop for previous LUNA and UST investors. The new LUNA token surged from $2 to $12 in the past three days – a 500% surge – and was last seen trading near $9.
Ivanov’s revival plan consists of several steps, focused on fixing the de-pegging of USDN, which happened on April 2 and led to a liquidity crisis on Vires Finance, a Waves-based decentralized non-custodial liquidity protocol.
Waves’ rally comes as USDN is trying to reclaim its dollar peg
TradingView
While WAVES is rallying on the revival plan, the USDN is yet to achieve its 1:1 dollar peg. The stablecoin traded at $0.956 at press time. The peg broke in early April due to “aggressive selling of the token in the USDN liquidity pool on Curve Finance,” according to the official blog.
Lastly, short squeeze may have added to bullish pressures around WAVES. The funding rate in the WAVES perpetual futures market has been consistently negative since April, indicating a bearish positioning. The funding rate, calculated and charged every eight hours, refers to the cost of holding long or short positions.
A negative funding rate indicates shorts are paying longs and the market is skewed bearish and vice versa. The cost becomes a burden for shorts when the cryptocurrency moves higher, forcing them to square off their positions. That, in turn, puts upward pressure on prices, leading to exaggerated gains.
Some shorts getting squeezed has not changed the bearish position on WAVES among futures traders
Coinglass
Perhaps, some bears dumped their positions in the past 24 hours, powering WAVES higher. That said, the funding rates are still negative!
