Here’s why the RaveDAO price surged and then crashed 95%

The RaveDAO price moved from nowhere recently and then surged to a record high, making it one of the biggest cryptocurrencies in the world. It jumped from below $1 to a peak of $28.90 on Saturday. It then plunged by 95%, erasing most of the gains made a week earlier.

RaveDAO price crashed amid claims of insider manipulation

In most cases, when a crypto token moves from nowhere and becomes a multi-billion-dollar asset, the main reason is usually market manipulation among traders or insiders. 

Market manipulation is relatively easy in the crypto industry because it is less regulated. Unlike in the stock market, crypto developers are not required by law to reveal their identities and report their transactions. 

According to ZachXBT, there are signs that accounts linked to the team had a role to play in the surge. He noted that the manipulation started on Bitget, Binance, and Gate.

The team has rejected these claims, noting that it was not engaged in and responsible to the recent price action. 

Its statement added that it operated with a long-term horizon and was planning to sell part of the locked tokens to fund activities like hiring and marketing. However, the statement sounded a bit hollow and not straightforward, with it saying:

“As the world faces increasing chaos, we as Web3 practitioners should channel attention and liquidity to where it’s needed most. We currently donate 20% of all event profits and future operating profits as we deem appropriate to philanthropic causes and will continue to do so.”

The ongoing RAVE price crash has led to substantial liquidations among traders who bought the rally. CoinGlass data shows that bullish positions worth over $3.9 million were liquidated.

Most importantly, the crash happened because the original rally was not based on any major new news. There was no network upgrade, no major partnership, nor a large token burn mechanism.

Wyckoff Theory explains the RAVE price crash

RAVE price chart | Source: TradingView

A common theory, developed over 100 years ago, also explains why the RAVE price jumped and then crashed. As the chart above shows, the token remained in a tight range for several months before this rebound.

This surge was part of the accumulation phase of the Wyckoff Theory. This phase is normally characterized by sideways movements and low market volatility. 

The token then moved to the markup phase, which happens when an asset goes parabolic. It is characterized by high volume in the spot and futures markets as investors embrace the Fear of Missing Out (FOMO). The phase is then followed by the distribution and markdown phases, which it has now moved in. 

A common question is whether the RaveDAO price will bounce back. While such a rebound is possible, history shows that most pump-and-dump tokens rarely bounce back. Some of the top pump-and-dump schemes that have never recovered are MYX Finance and Mantra.