Crypto.com’s native token Cronos (CRO) is showing restraint on Nov. 14 against mounting sell-pressure building in the wake of the FTX’s dramatic collapse last week. Now, the CRO/USD pair is eyeing a watershed price recovery.
On Nov. 14, CRO’s price wobbled between profits and losses, trading around $0.069 a day after crashing to $0.05, its lowest level since April 2020 — that’s a 60% price decline from November’s peak of around $0.178.
CRO funding rate drops to -3%
The period of CRO’s price decline occurred alongside a sharp drop in the token’s perpetual futures funding rates.
Funding rates are recurring payments made by traders based on the difference between the prices in the futures and the spot market. A positive funding rate means bullish traders (long positions) pay bearish traders (short positions), representing their confidence about a price rally.
Conversely, a negative funding rate means short traders pay long traders to keep their positions open. On Nov. 14, CRO’s funding rates on Huobi and OKEx dropped to minus 3%, showing traders are extremely bearish on the token.
“This is literally the exact same dynamic that occurred before Celsius and FTX collapsed,” warned Dylan LeClair, senior analyst at digital asset fund UTXO Management on Nov. 13, when CRO funding rates were near minus 2%.
FTX contagion fears spread to Crypto.com
The CRO selloff started from fears of contagion amid the FTX fiasco, particularly concerns that Crypto.com, a Singapore-based crypto exchange, would collapse in the same manner as FTX.
At the core of these worries is potential insolvency, with analysts pointing out that Crypto.com is holding low-liquid cryptocurrencies like Shiba Inu (SHIB) and its own token CRO as reserves, which reportedly make up 40% of the exchange’s total assets.
4.https://t.co/INIxikfNzy holds $1.6B worth of BTC/ETH/USDT/USDC/DAI/BUSD assets, accounting for 60%.
40% of assets are low liquidity assets.
— Lookonchain (@lookonchain) November 13, 2022
In addition, Crypto.com also moved $210 million worth of stablecoins from Binance and Circle before demonstrating its reserves to the public. Binance CEO Changpeng Zhao confirmed the move, urging caution, the day before CRO dropped to its April 2020 low.
If an exchange have to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away. Stay #SAFU….
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