MATIC suffered an extraordinary 73% collapse yesterday, including a 67% drop in just two hours, following a seemingly unstoppable three-week rise that had seen it grow 250%. Other alts such as RVN and ONE also suffered large double digit losses, but it was MATIC’s catastrophic collapse following is seemingly inexorable rise that caused the most comment, and led to further concerns over manipulation in margin trading environments.
MATIC Team Blamed for Token Dump
MATIC’s disastrous collapse was met with a typically swift response within the crypto community, with the team themselves having the finger pointed squarely at them following a supposed 1.5 billion token transfer from the Matic Foundation to Binance:
Just did some snooping around to find that the #Matic Network Foundation has transferred 1,495,322,715 $MATIC (15% of the supply, approximately $67,314,942 at ATH) in the past 50 days, of which from seems to have been sent for liquidation at #Binance. https://t.co/FLPl4HyfiO pic.twitter.com/dpYG8rMoHX
— Samuel JJ Gosling (@xGozzy) December 10, 2019
This theory took off and flooded crypto Twitter in a matter of minutes, getting plenty of subscribers along the way:
Matic team rich af now…that’s it, that’s the narrative pic.twitter.com/WAZBMFNW4O
— TheBryMan™️ (@thebryman530) December 10, 2019
Your #matic masters dumped on you. https://t.co/cZE9FZgtVr
— I am Nomad (@IamNomad) December 10, 2019
However, both Matic COO Sandeep Nailwal and Binance CEO Changpeng Zhao (CZ) were quick to deny the allegations that there was something sinister behind the dump, from their end at least:
Our team is still investigating the data, but it’s already clear that the MATIC team has nothing to do with it. A number of big traders panicked, causing a cycle. Going to be a tough call on how much an exchange should interfere with people’s trading. https://t.co/wOVF6tEBkQ
— CZ Binance (@cz_binance) December 10, 2019
True enough, having firmly embedded itself into the minds of those who like to cling to the most dramatic explanation of a situation before learning all the facts, the ‘team dump’ theory was soon debunked:
I just want to deeply apologise for providing an inaccurate claim, it turns out it was only 381,903,830 $MATIC (3% of the supply) that “seems” has been liquidated, I made a miscalculation and included inputs as well as outputs in my computation. https://t.co/BHFu5GW0A2 pic.twitter.com/9xdoC19Ga6
— Samuel JJ Gosling (@xGozzy) December 10, 2019
Whoops. It wasn’t long however before other theories were doing the rounds, including an airdrop sparking a selloff, while others turned their ire towards Binance, and in particular CZ, for allowing margin trading up to 125x, with the suggestion being that, having completed an epic three-week run, whales took a large short position on MATIC and dumped a bunch of tokens, causing a run on the token which took it back to where it started.
If Nailwal is to be believed and the team had nothing to do with the dump, then this is the most likely option, and is a reminder of what, of all people, Suppoman warned about last week – that margin trading is where whales play and small fish get eaten in droves. The other thing to take from this experience, which will very likely happen again, is that taking profit at 100-200% in a market such as this is not just advised, it is essential. Whatever goes up must come down, and as MATIC showed, the downside can be unexpectedly violent, and should offer an important reminder to all of us:
The sad part about $matic
because it happened so quickly
Is that people are going to wake up to it
And not want to live anymore
Never risk more then you can afford to lose
please
— Rampage (@Thrillmex) December 10, 2019
