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Liquidation of $80 million! $TRB surged 139% in a day and then plummeted 70%, how do whales manipulate the market behind the scenes?

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Liquidation of $80 million! $TRB surged 139% in a day and then plummeted 70%, how do whales manipulate the market behind the scenes?

Just yesterday, Tellor $TRB token experienced unprecedented volatility within two days, reaching as high as $555 and as low as $121, resulting in over $80 million worth of positions being liquidated. However, it has been disclosed that the token's liquidity is already controlled by multiple whales and teams, making this orchestrated pump and dump scheme quite evident.

TRB Bloodbath Incident, Retail Investors Suffer Heavy Losses

On the first day of 2024, the price of TRB token surged by 139% in just one day, with the market cap doubling to $1.52 billion. Subsequently, the price plummeted by 70%, and all these fluctuations occurred within a single day.

Coinmarketcap: TRB price

According to Coinglass data, by 8 a.m. on January 2nd, TRB had a total of $81.11 million liquidated in this price rollercoaster, surpassing the liquidation amounts of Bitcoin and Ethereum.

Currently, the token also saw $15.2 million liquidated within 24 hours, a figure not far from the liquidation amount of Ethereum.

It is understood that TRB is the official token of the decentralized oracle project Tellor, with its price hovering around $15 for most of the year, but suddenly began a rapid surge in September, rising over 900% within two months, drawing attention from the community.

Background: Highly Concentrated TRB Chips

A few days ago, the on-chain data tracking platform Spot On Chain issued a warning that TRB is a token with highly concentrated chips. Out of the 2.5 million TRB tokens in circulation, approximately 1.7 million are circulating on various exchanges, while 660,000 are held by 20 whale addresses, accounting for as much as 95% of the token's liquidity on the chain.

It is said that these addresses had purchased and held these tokens at a very low cost of $15 from August to September, and continued to sell off their tokens at higher prices on various exchanges, accumulating realized profits exceeding $40 million, with unrealized profits still increasing.

Spot On Chain's analysis of TRB whale addresses

At that time, Spot On Chain speculated:

Since most tokens are still held by these whale entities, the price may experience a significant increase to clear short positions, in order to execute their large sell orders.

Did the Tellor Team Dump Too?

Additionally, another on-chain analysis platform, Lookonchain, discovered that as the token price surged, the Tellor team's address deposited 4,211 TRB tokens worth $2.4 million into Coinbase at the time.

Upon close inspection, the deposit was made at a price of approximately $581, which was not far from TRB's peak price, followed by a plummet of over 70%.

Time of Tellor team's token deposit into Coinbase

This move was heavily criticized by the community, as such large-scale market manipulation is likely to cause market panic and encourage copycat behavior.

How Did Market Manipulation Occur?

PANews also reported on this incident yesterday and analyzed the logic behind the whales' trading. There are risks of market manipulation following the sharp rise and subsequent crash of the CYBER token.

Following a 354% Surge in $CYBER: Upbit Premium, Mistaken Proposal, Market Manipulation, How Should Investors Respond?

Contract Holdings Increase with Price Rise

Starting from the afternoon of the 31st, the contract holdings increased along with the price trend, indicating a significant amount of funds building long positions in the market.

However, upon closer examination, while the number of long and short position holders increased, the ratio of large holders' long and short positions remained unchanged, indicating that the upward trend was driven by retail investors, known as "retail following longs."

PANews believes that at this point, the whales would control the market chips through wash trading. Within the following hour, there was a 28% drop at the tail end of the blue arrow, and the holdings slightly decreased as a result.

Furthermore, the author saw the dumping at that time as a way to attract new funds by attracting the attention of retail speculators through significant price fluctuations, facilitating the whales to drive up sales.

Retail Investors Long on the Upside and Short After Sideways Movement

Subsequently, the ratio of long and short position holders continued to rise after the crash, showing that retail investors tended to go long, represented by the green area.

However, when the price returned to around $295 and traded sideways for a few hours, the holdings and the ratio of long and short position holders rapidly decreased, indicating that retail investors no longer saw opportunities for further price increases, closing their long positions and initiating short positions.

How Did the Whales Drive Up Prices?

During this time, the price steadily rose from $250 to $464. The author believed that the whales continued to place large buy orders at critical support levels to attract market-making bots or traders reliant on order book information to actively buy and push up prices.

It is reported that the whales spent a total of $40 million to boost prices and ceased buying after reaching $464.

However, it was clear from the ratio of long and short position holders that retail investors were still shorting, indicating a precarious situation.

Profit-Taking Phase

Finally, the whales continued to dump through the common practice of "pump and dump." The subsequent two waves touching the high point of $555 and breaking through the sideways movement, represented by the red area, could be seen as intervals for the whales to dump; through failed breakouts, traditional technical analysis traders were attracted to take over.

Soon after, with the main buying pressure lost, the TRB price rapidly declined, dropping over 70% within just one hour, ending the whales' control process.

Arbitrage Traders Also Caught in the Crossfire

In highly volatile token markets, there are even more extreme funding rates in the derivative contract markets of various exchanges, including TRB.

The author also mentioned that the funding rate on Binance for TRB reached the upper limit of -2%, while OKX was at -1.5%; the former settles every 4 hours, while the latter settles every 8 hours.

For funding arbitrage traders, the 6.5% profit over 8 hours is significant, as they can open long positions on one exchange and hedge with short positions on another.

However, it was evident that OKX's price reached as high as $735 last night, while Binance was only at $555, indicating a noticeable discrepancy.

TRB: OKX price reached $735, while Binance was at $555

This phenomenon indicates that the price surge of TRB on OKX was too strong, and the token's depth on the exchange itself was shallow, causing excessive price fluctuations. This led arbitrage traders who shorted on OKX to experience successive stop-losses or liquidations, resulting in failed arbitrage attempts and losses.