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The Yield Guild Games (YGG) token surged by 600% and hit a high of $0.9254 at 3:35 PM (GMT+3) but dipped immediately after. The token price has crashed to $0.36 in less than 24 hours and there are no signs of a recovery any time soon.
But why have the YGG token price crashed after what crypto investors thought is the beginning of a long-term Bull Run? Well, this article delves into what really caused the crash.
Why did the Yield Guild Games token price rally?
While the price of YGG is still 98.27% higher on the weekly chart, the sudden crash after a 600% surge in the past week has caused panic among investors.
There were several major developments that caused the seven days-long price rally. To start with, Yield Guild Games revealed the fourth season of the Guild Advancement Program (GAP) on August 3. The Guild Advancement Program is a recurring gaming event that awards community members who successfully complete specific quests while taking part in YGG-affiliated games with rewards like tokens.
The event will run until the 27th of September, 2023 and some of the biggest names in the industry, such as Splinterlands, Skyweaver, and Axie Infinity, will be featured. As a result, the Yield Guild Games network usage increased, reaching a month-high of 192 active addresses.
Binance recently also declared that it would introduce a YGG/USDT trading pair for perpetual contracts on its CEX platform, with up to 20x leverage. On-chain data readily available indicates that the announcement added about $100 million in fresh capital to the YGG ecosystem.
Why did the YGG price crash?
While to some the crash was sudden, the token was already showing signs of a decline in its steadily dropping trading volume while the price rose. The trading volume saw a 26% drop in 24 hours, falling under $500 million, while the market cap rose by $17 million, hitting $161 million.
Even though the growth of Yield Guild Games has been quite noticeable, reports have surfaced that the project’s original backers, venture capital firms, are reportedly looking to sell their shares of YGG on Binance.
Bitkraft Ventures and DWF Labs moved their YGG holdings to Binance, according to data from LookOnChain obtained on August 7th, and are most likely looking to sell. Bitkraft used FalconX to make sizable YGG deposits on Binance.
29.13 million YGG had been transferred to DWF Labs from the Yield Guild Games Treasury. On-chain data, however, seems to indicate that the majority of these tokens have been transferred to exchanges.
Over the past four days, Wintermute Trading, another whale, is said to have deposited just over 11 million YGG worth about $6.7 million to various exchanges. Wintermute currently holds 2.5 million additional YGG tokens worth about $1.5 million.
LookOnChain also revealed that Youbi Capital had transferred 2 million YGG tokens to Binance. Currently, the company has about 7.6 million YGG tokens.
Large deposits like the ones mentioned above mostly indicate an investor’s readiness to either sell the tokens or exchange them for other assets. This has therefore resulted in heightened sell pressure on the token, which is the most likely reason for the current price crash.
The post What caused Yield Guild Games (YGG) to crash after the 600% surge? appeared first on Invezz.
