In the past day, the price of HIFI Finance has taken a sharp 40% nosedive, erasing a substantial portion of the impressive 362% gains it had seen over the previous week.
Upbit, South Korea’s largest cryptocurrency exchange, played a significant role in this scenario. They recorded a substantial trading volume of $717 million within the last day, making them a leading player in the spot trading of HIFI.
The decline in HIFI’s price coincided with an event on September 16 when the Binance exchange introduced the HIFI perpetual contract, a move that seemed to contribute to the price downturn.
After an exciting seven-day surge, the price of HIFI Finance (HIFI) experienced a notable decline. This rally had been eagerly anticipated by token holders following a prolonged period of stability. Interestingly, this upswing and subsequent drop occurred at a time when Bitcoin (BTC) remained relatively stable, leaving the overall market in search of a catalyst.
Altcoins May Be a Good Buy Now
According to analysts, the current market conditions present an opportune moment to consider purchasing alternative cryptocurrencies, often referred to as altcoins.
HIFI Finance’s Remarkable Price Surge
HIFI Finance (HIFI) saw an astonishing 362% increase in its price when compared to the stablecoin Tether (USDT) on Binance Exchange over the course of seven days. This surge led HIFI’s closing price on September 16 to reach $2.320, and it even surpassed a significant psychological milestone by briefly reaching an intra-day high of $2.635.
This surge in HIFI’s price was closely tied to a substantial uptick in its trading volume on the South Korean exchange Upbit. Upbit Korea was responsible for approximately 65% of the total trading activity of HIFI, with Wu Blockchain reporting a remarkable 208% surge. It’s worth noting that Upbit led the way in spot trading, with an impressive $717 million in trading volume within the past 24 hours.
However, the price of HIFI Finance has taken a recent hit, dropping by approximately 40% within the last day. This dip was reportedly influenced by Binance’s introduction of the HIFI perpetual contract.
HIFI token has risen 208% in the past 7d. Upbit, South Korea's largest exchange, is the main spot player, with a trading volume of $717m in the past 24h. After Binance opened the HIFI perpetual contract on September 16, HIFI fell sharply, falling more than 30% from its high. HIFI…
— Wu Blockchain (@WuBlockchain) September 17, 2023
Understanding Perpetual Contracts
A perpetual contract is a financial agreement, somewhat similar to a futures contract, with one significant difference: it doesn’t come with an expiration date. In simple terms, it’s a deal between two parties to buy or sell an asset at a fixed price, and this agreement doesn’t have a set end date.
Perpetual contracts offer traders a way to speculate on an asset’s value using leverage. What’s special is that traders don’t need to worry about the contract expiring like they would with traditional futures contracts. This means they can potentially make more significant profits.
However, there’s a catch. While perpetual contracts can amplify profits, they also carry a risk. If the price of the asset drops significantly, it can lead to the quick liquidation of traders’ investments, especially for those who had taken long positions, essentially closing their contracts prematurely. This risk factor makes perpetual contracts a potentially high-reward but also high-risk trading instrument.
Potential Cause for HIFI’s Decline on Binance Exchange
Perpetual contracts are known for providing increased liquidity and narrower spreads in the market. Moreover, they have a valuable feature: they are more resistant to market manipulation.
Fun Fact 3.
Korean crypto traders love pumping & dumping altcoins, ironically. Got this clip from my Korean friend. pic.twitter.com/63Ewssu5VO
— Ki Young Ju (@ki_young_ju) March 30, 2023
In the past, Korean traders have been linked to a pattern of rapidly inflating and then deflating the prices of alternative cryptocurrencies, a behavior known as “pump-and-dump.” CryptoQuant CEO Ki Young Ju has recognized that Korean traders particularly favor this strategy when dealing with altcoins.
Young Ju explained that this behavior is influenced by the region’s “rigorous capital controls, which prevent arbitrage opportunities across international exchanges.”
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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