Looking Back at Alpaca Finance: When FUD Turns into a Brief Wealth Code

深潮TechFlow

2025-04-30 10:29

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Original Article Title: "Looking Back at Alpaca: When FUD Becomes a Fleeting Wealth Code"

Original Source: DeepFlow Tech

These days, the soon-to-be delisted "Alpaca Coin" $ALPACA from Binance has been active on the market stage, with a $30 million circulating market value stirring up over $10 billion in total trading volume. On April 24, Binance announced the delisting of four tokens, including Alpaca Finance ($ALPACA), scheduled for May 2.

The news of "Binance delisting" is usually a significant FUD event for a project — delisting implies reduced liquidity, shrinking trading volume, and often a sharp price drop or even collapse for the token.

However, after the delisting announcement, $ALPACA experienced a roughly 30% price drop in a short period (based on Binance spot trading), but then the price surged nearly 12x in three days, skyrocketing from $0.029 to a peak of $0.3477. Simultaneously, the open interest (OI) of $ALPACA futures contracts far exceeded its token market value multiple times, ushering in a brutal long vs. short battle around $ALPACA.

Fee Settlement Acceleration Intensifies Long vs. Short Battle

Subsequently, Binance adjusted the funding rate rules, shortening the maximum fee rate settlement period to every hourly (up to 2%), further intensifying the fierce long vs. short battle. Longs not only profited from driving up the price but also continued to "eat" the high funding rate. Longs kept "eating and holding" for several days, leading $ALPACA's price to engage in a high-stakes battle at elevated levels for almost four days.

With an hourly settlement and a -2% fee rate, under the premise of 1x leverage, a short position held for a day would lose at least 48% of the principal. Despite bearing such a high rate, there were still funds willing to continue shorting.

In the intense battle, some noticed that large-scale follow traders with million-dollar positions had been consistently shorting $ALPACA with high leverage, eventually leading to liquidations involving hundreds of millions of dollars of user funds.

On April 29, Binance raised the $ALPACA contract rate limit to ±4%. For shorts, another increase in the fee rate limit would exponentially raise the cost of shorting. However, despite the rule change that should have discouraged shorts, the price of $ALPACA "counterintuitively" plummeted from $0.27 to around $0.067.

No Absolute Trading Rule

As the trading volume and attention gradually shift, the $ALPACA story may have come to an end.

Looking back at this billion-dollar-scale farce, in some ways, $ALPACA these days can be seen as a kind of meme—brought a massive amount of attention by the delisting bearish news, allowing the "red is also red" principle to be fully leveraged in price fluctuations. At the same time, with a relatively low circulating market cap at the same level of environment (top-tier trading platforms) (bottoming out at less than $4 million), highly controlled chip holdings, and continuously stimulating player's nerves with high volatility price swings, even the image of a "alpaca" can be associated with a meme.

Although the image is cute, for users truly involved in the game, these days can perhaps only be described as "bloody." The appearance of crazy bullish moves on bearish news, and the smooth fall on the news of the "explosion," $ALPACA's complex recent trend has overturned the usual "sell the news" logic and has also overturned many people's positions.

Evidently, the boundary between "good news" and "bad news" has gradually blurred, and the previous single judgment logic has gradually become inapplicable to the constantly evolving market. In its place is the violent manipulation of human nature dominating, with ever-refreshing liquidation data gradually taking over the market. Describing this evolutionary direction as "barbaric growth" may be more appropriate.

However, everything has two sides, and as some feel confused, others feel excited. This farce is not a bad thing for everyone. For many participants who are pursuing price volatility excitement and have outstanding abilities, the alpaca's recent behavior is even a rare opportunity to make a big profit.

There are also voices suggesting that behind the market makers shorting at all costs with copy trading user funds is a hunt for retail investors' funds, as the movie tagline says, "The aristocrat's money is all returned, and the commoners' money is split 70/30." The truth of the statement is hard to judge at the moment, but what can be confirmed is that even if the actual situation is not as dark, the ultimate winner in this manipulation will not be the average user.

In the absence of adequate regulatory measures, $ALPACA may not be the last time this market sees a crazy manipulation. As of the completion of this article, $ALPACA's price is still experiencing intense fluctuations, and perhaps there will be more exciting "performances" before the official delisting.

However, in the precarious price game, there is hardly a safe haven for uninformed participants. Under the hunt of attention and liquidity, perhaps less watching and more action is the retail investor's most positive expected value (EV) move. Those who see major news and abnormal price movements and think, "the opportunity has come," are not just retail investors but also the long-awaiting project teams.