Analyzing Alpaca Finance’s (ALPACA) Pump and Dump on Binance Delisting

Key Takeaways

• Alpaca Finance (ALPACA) increased on news of Binance delisting.
• The price has fallen significantly since, losing most of its previous gains.
• Why did the ALPACA price respond positively to the negative news?

On April 24, Binance announced it would delist four tokens, including ALPACA, on May 2. Such negative news often causes a price decline, but that was not true for ALPACA.

On the contrary, the price increased gradually after the news and went parabolic on April 29. This was likely caused by a funding rate cap adjustment that allowed whales to profit.

The ALPACA price declined significantly after the delisting, but is now attempting to begin a relief rally.

Let’s examine the charts and see if this bounce can continue.

ALPACA Price Corrects

The ALPACA price completed a five-wave upward movement (green) starting on April 17.

Wave five extended considerably, reaching 1.61 times the length of waves one and three combined.

The ALPACA price fell significantly after the high, preceded by a bearish divergence (orange) in the Relative Strength Index (RSI).

If the wave count is accurate, ALPACA is now in wave C of an A-B-C corrective structure.

Therefore, the relief rally was part of wave B in this correction, and the price will soon resume its descent.

If the decline continues, the closest support will be at $0.070, giving waves A and C the same length.

*The remainder of this article was originally published on April 30. The above analysis provides an updated look at ALPACA’s price movement since then.

ALPACA Pumps After Delisting

One potential reason for ALPACA pumping on the negative delist news is the update on the funding rate settlement.

On the same day as the news, Binance announced that it would increase the funding rate settlement frequency of Alpaca futures contracts to every two hours, capped at a negative and positive 2%.

The funding rate change considerably affects how much users earn for holding a position open, based on whether it is negative or positive.

At the time, the funding rate was negative , causing short traders to pile up positions and profit from the funding rate.

However, the opposite happened since buyers pushed the price up and triggered a cascade of liquidations.

This announcement was the catalyst for the first ALPACA price increase.

On April 29, the funding rate cap was changed from -4 to 4%, triggering another significant price increase for the same reason.

An X user noted the trend of low-cap tokens pumping at delist news. He believes whales set a trap by opening huge futures longs and pumping the spot price, triggering liquidations.

With this strategy, whales profit from the price increase and funding fees.

Will ALPACA Continue Rallying?

The ALPACA technical analysis shows that the price started a five-wave upward movement on April 17, before the delisting news.

ALPACA started wave three and accelerated its upward movement on April 24.

If the count is accurate, the price is now in this upward movement’s fifth and final wave. 

Wave five has extended and is longer than waves one and three combined, usually the level where the extension of wave five ends.

The bearish divergence in the six-hour Relative Strength Index (RSI) supports this possibility.

While ALPACA may reach the 1.61 extension at $1.36, the price increase is close to an end.

Bullish Reaction to Negative News

Binance announced ALPACA delisting on April 24, and the price pumped afterward. This unexpected reaction is likely due to a change in the frequency of settlement rates.

The ALPACA price has likely completed its five-wave upward movement and is now mired in a correction.