According to LookOnChain, Egorov has deposited 431 million CRVs (worth around $246 million) across multiple decentralized lending protocols and borrowed $101.5 million in stablecoins across multiple platforms. Egorov's Staking accounts for 50.5% of CRV's circulating supply.
While the size of Egorov's loans puts the token under enormous pressure, negative Staking on CRV have increased significantly, providing fuel for a possible rapid upside move.
Is a Short squeeze for CRV?
Open interest volume for CRV perpetual swaps increased from $35.5 million to $46.3 million after Egorov's loans were disclosed.
Funding rates for CRV on centralized Derivative exchanges like Binance and OKX have fallen to their lowest levels in history, nearly 81% year-over-year, according to CoinGlass data. A negative funding rate suggests that most of these new traders are betting on a continuation of the decline.
When the sellers get crowded, it creates an opportunity for the buyers to find their stop loss. This phenomenon is known as a Short squeeze. It occurs when the price of an asset moves rapidly in the opposite direction to Short players as they rush to protect their positions or buy the asset to close their positions.
CRV funding rate for perpetual swaps. Source: CoinGlass
Technically, the CRV/USD pair could find support around the 2022 low between $0.53 and $0.40. Given that a quick recovery from a Short squeeze is possible, the price could touch the 50-day moving average at $0.82.
On the downside, a break of this support could see a prolonged sell-off towards the 2021 lows near $0.32. At the time of writing, CRV was last trading at around $0.59.
Daily CRV/USD price chart. Source: TradingView
The CRV/ETH token pair looks particularly weak, as the pair has recorded a new all-time low. The pair seems to be following a descending pattern, hinting at a possible recovery from the 0.0032 ETH level.
However, the long-term trend remains negative while being engulfed in a descending channel, especially with ETH market structure looking particularly bearish below the 0.0042 ETH support from the 2022 low.
CRV/ETH daily price chart. Source: TradingView
CRV's long-term forecast looks bleak
Curve's sales stats aren't favorable for buyers either. The platform's fees have dropped significantly after the crash of FTX in November 2022, reducing CRV's profitability over time. CRV Staking are paid 50% of Curve's revenue from transaction fees.
Although decentralized exchange activity saw a temporary increase in activity in March 2023, fees have remained near two-year lows in recent months.
Transaction fee revenue on Curve. Source: Dune
Another way that CRV token holders accumulate value is through “bribes” earned from voting to direct rewards to specific groups. Similar to transaction fees, income through bribes is also almost at the lowest level in a year.
Bribes are paid to CRV Staking people. Source: Dune
Curve's Liquidation has decreased significantly in recent months, leaving CRV vulnerable to sharp price fluctuations. Cryptocurrency research firm Kaiko found that the Liquidation of CRV has decreased significantly during the year, to the point where an order worth $800,000 can cause the price to increase 2%.
There is a lot of uncertainty surrounding CRV as it faces liquidation risk from a $264 million CRV collateralized decentralized finance loan on Aave. However, the possibility of a rapid price increase in the short term is forming as futures traders focus on Short trades. CRV's decrease in market Liquidation further increases the risk for traders as the token is highly volatile.
