Curve token jumps 50% amid squeeze on big short position

Quick Take

  • After sinking 25% earlier today, the price of the Curve DAO (CRV) token rebounded 50%.
  • The bounce appears to be tied to a squeeze on one trader’s big short bet.

The price of the Curve DAO token (CRV) rallied significantly today in what appears to be a squeeze on a publicized short bet.

Data from CoinGecko shows the CRV price fell sharply this morning from $0.53 to $0.40, a decline of about 25% to the token's lowest level in two years. The sharp fall was followed immediately by a massive spike of more than 50% that saw CRV go as high as $0.61.

CRV is currently trading at $0.60 as of the time of publishing, posting a 17% price gain in the last 24 hours.

The volatile price action for CRV appears to be connected to a major short position on the token that saw a trader borrow a total of 92 million CRV from the DeFi lending platform Aave using $57 million in USDC as collateral. The trader had been selling the CRV tokens, as previously reported by The Block, which could have been responsible for the initial decline earlier in the day.

Curve token price action

The price recovery now puts the short seller in danger of liquidation. Data from the trader’s profile on portfolio tracker DeBank shows the initial loan on Aave now has a health factor of 1.08. 

Debt positions go into liquidation when the health factor, which represents the value of borrowed tokens against the worth of the collateral deposited, dips below 1.

The short seller will face liquidation if CRV rises above $0.63, but the trader can prevent this from happening by posting more collateral on Aave.

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