- The token collapsed from $0.042 to $0.012 instantly.
- The drop was quite unexpected because it was up 180% over a span of two weeks before the drop.
- Multiple theories have surfaced about what could have possibly caused such a shocking drop.
The digital-token Matic dropped a staggering 70% in only one hour on December 10, making this one of the severest drops in crypto history. The token collapsed from $0.042 to $0.012 instantly leaving traders absolutely baffled. The dumped amount is roughly $60 million in terms of market cap.
This massive drop was somewhat unexpected because Matic had been performing very well prior to the drop. It was up 180% over a span of two weeks before the drop. The dramatic drop left the social media platform, Twitter in a frenzy with people questioning the management or wondering if it was an inside job.
What Cause this Massive Dump?
Nobody currently knows what caused this to happen. Many think that the founders of the project created this to occur by dumping their tokens on the market to which the COO of Matic replied by pleading innocence and saying that they had no role whatsoever in this drop.
Just woke up to this nightmare due to a distress call by someone— Sandeep Nailwal-Matic Network (@sandeepnailwal) December 10, 2019
It will be clear very shortly that we are not behind this, as some FUD accounts are trying to insinuate
We will post a detailed analysis and we will come out stronger than ever from this evident manipulation
who’s the culprit: Matic Team?
Binance CEO supported him by saying that the Matic team was not involved and that this was caused due to a cycle of panic amongst traders. Binance owns a majority and what some people have said is that for the first time there was margin trading on an illiquid Binance book after an airdrop and that led to the whopping drop.
Our team is still investigating the data, but it's already clear that the MATIC team has nothing to do with it. A number of big traders panicked, causing a cycle. Going to be a tough call on how much an exchange should interfere with people's trading. https://t.co/wOVF6tEBkQ— CZ Binance (@cz_binance) December 10, 2019
Whale Market Manipulation Strategy?
Another theory is that the top few Matic addresses hold 99 % of the supply and it could lead to manipulation if there is a coordinated liquidation. Other theories have also surfaced like how the issue is a case of pump and dump which is basically where a large buyer inflates the price over time before they offload their holdings or an exit scam where the developers of a digital asset sell all their holdings instantly and abandon their project.
Lots of searching for the true reason $MATIC dumped…— Luke Martin (@VentureCoinist) December 10, 2019
These moves will happen in markets (alts) that are:
-One party controls large percentage of the supply
Compare the $MATIC chart to $XRP. Same exact cycle has played out there before. pic.twitter.com/PpYHCxRC5B
Is it due to Panic selling ?
Is IEO’s Prone to Pump and Dumps?
Regardless, this incident is something that could have happened to any token and as some traders have called it, is the stuff of dreams and nightmares. It, therefore, sets a precedent for all the other exchanges and the various stakeholders in the crypto market and enables everyone to prevent such an incident from repeating itself.