RUNE Price Craters 30% Amid THORChain Insolvency Speculation

Key Takeaways

• Concerns about THORChain’s debt, estimated at nearly $200 million, have triggered panic selling around RUNE.
• The trading volume has surpassed $650 million and could intensify the downward pressure if sustained.
• With THORChain yet to make a public statement, RUNE’s price risks further decline below $2 in the short term/

The price of RUNE, the native token of settlement protocol THORChain, has plunged by 30% in the last 24 hours. This decline comes amid speculation that the chain is no longer solvent.

These rumors of potential insolvency have triggered panic selling, driving downward pressure on the token’s price.

With uncertainty surrounding THORChain’s stability, this analysis reveals all the details about the situation and what could be next for RUNE.

THORChain Stability Is Called Into Question

According to pseudonymous X user TCB, THORChain might have become insolvent. He said the chain has paused withdrawals on Bitcoin (BTC) and Ethereum (ETH).

TCB, who prides himself as one of the largest investors in the project,  mentioned that this has happened because of the project’s debt profile and liabilities worth nearly $200 million.

“I won’t beat around the bush and act like everything is alright. It isn’t. Thorchain’s liabilities: – $97m of lending liabilities ($eth $btc) – Approximately $102m worth of savers and synths ($eth $btc).” The investor stated .

Meanwhile, another user on the social media platform elaborated on the cause of the current situation. According to user xx, THORChain developers made a critical error by introducing a no-liquidation, no-expiry feature.

The user acknowledged that the cross-chain functionality is performing well. However, he admitted that this decision appears to have significantly contributed to the chain’s potential insolvency.

“Chain is functioning fine & there is potential to save the project, but they are in some trouble right now that will take time to fix… Depending on how they handle the situation, this will either be a huge BTFD or the end… insolvency is never a good thing.” He said.

Before these reports became public, RUNE’s price was $3.35. But as of this writing, it has declined to $2.10 amid rising selling pressure. Furthermore, the volume around RUNE has also spiked.

Yesterday, Jan. 23, the average trading volume was less than $250 million. However, according to Santiment, the volume has now risen above $650 million.

From a trading point of view, rising volume plus increasing price is a bullish sign. But in this case, the hike in volume alongside the price correction indicates a strengthening decline.

If sustained, the RUNE price decline might continue in the short term unless traders begin to buy the dip in large volumes.

RUNE Price Prediction: The Decline Continues

Between August and December 2024, RUNE price traded within an ascending channel, reaching a peak of $7.57.

But since the month of last year, the token has struggled to maintain an uptrend for a long time. According to the daily chart, the Awesome Oscillator (AO) continues to linger in the negative region, indicating bullish momentum.

The Relative Strength Index (RSI) has also seen its reading fall further. If sustained, this AO and RSI rating could send the RUNE price further down the charts.

If validated, the altcoin’s value might drop below $1.95. However, if THORChain clarifies that it is not heading toward insolvency, this trend might change.

RUNE’s price might climb to the 0.618 Fibonacci level at $5.42 in that scenario. However, at the time of this analysis, the project has yet to make any public statement regarding the issue.