The collapse of the cryptocurrency on December 3 caused panic in the market

December 3-4, 2022

At 17:00 on December 3, 2022, the cryptocurrency market began to fall less than half an hour before the opening of the US trading session. At the end of Friday, Bitcoin lost 10% of its capitalization and broke through one of the most important support areas at the level of 54-53 thousand dollars. Eight hours later, the market decided to fall further. In a matter of hours, Bitcoin lost another 20%. A strong reaction from buyers caused 42 thousand dollars. From this level, the main cryptocurrency returned 16% in an hour.

Analytical portal

Cryptocurrency traders lost more than $2.4 billion in the crash, according to futures liquidation data. However, liquidation in April 2022 is still less than $8 billion. How similar or different are these two movements?

Cryptocurrency to dollar rate

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Reasons for the fall

One of the most influential cryptocurrency analysts, Willy Wu, suggests that the latest dump was partially caused by spoofers. Cryptocurrency spoofing is a process by which criminals attempt to artificially influence the price of a digital currency by creating fake orders. Spoofing is achieved by creating the illusion of pessimism (or optimism) in the market. This way, even the largest coins (like BTC) can be moved around a lot.

But spoofing itself is not that powerful. Another reason for the fall is strong support levels. They are so strong that millions of traders place their stop losses below these lines. And you know what happens when millions of stop losses are executed simultaneously. This is called a "long squeeze", a short squeeze, but in a different direction (read the article to learn how to trade in such cases).

The gunpowder below the 52 thousand dollar level was enough to blow up the market. So the momentum of the movement is clear. But what now?

Squid Game

Of all the dead coins of 2022, Squid Game is the most notorious. A South Korean Netflix show inspired the creation of a token that launched in late October and scammed people out of thousands of dollars. The goal of the project was to use tokens in a game that had not yet been launched. The biggest red flag was that the coin was unsalable.

The token was released at a price of 0.04 USD on October 27 and rose to 35 USD by October 31. After attracting more investors, the token soared to a high of $2,856 on November 1 and fell to $0.002 on the same day, according to CoinMarketCap. The founders cashed out, leaving other investors high and dry.

This is a scam that thrives on decentralized exchanges since any users can list tokens for free without auditing. The key feature of this scam is that prices skyrocket within 24 hours.

The developers of the Squid Game token cashed out at the high price and, as the BscScan transaction shows, earned $3.7 million. Some investors lost thousands of dollars. One investor told CNBC that he invested $28,000 of his savings in the token and lost it all.

Charlie Barton, investment specialist at Finder, said: “With new cryptocurrency projects, you need to understand that many of them are scams. A lot of projects don't have a team, technology or any value - they're just a bunch of people who want to create some buzz for their project and make some money."

How to Avoid Failures

The above list of dead coins, which, of course, is far from complete, shows that, despite the most noble goals of the project, any cryptocurrency can cease to exist at any time for a number of reasons.

Some experts note the following: “Coins that truly generate interest due to the introduction of new technologies or other innovations have a higher chance of survival and are less likely to end up on the list of dead coins.”

“Most of the coins on the list are little-known projects that were either scams from day one or died due to lack of interest from users, creators, or both.”

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Ekta

Ekta is a cryptocurrency that aims to connect the physical and digital worlds through the tokenization of real-world assets. Ekta was launched in August, then peaked at $10.41 before falling to $0.15 after the attack. The coin is currently unavailable.

On October 11, Ekta was hacked from the inside by a hacker who had privileged access to the Pancake Swap and bridge smart contracts. Ekta is no longer providing information about the situation, fearing that the attack could happen again. After the hack, Ekta instructed its Telegram to stop trading, but plans to restart soon.

Bogged Finance

The Bogged Finance (BOG) token is down almost 100% this year. The price drop in this case was caused not by the intentions of the founders, but by a hacker attack.

Bogged Finance is a decentralized finance (DeFi) suite for Binance Smart Chain that aims to integrate tools typically only used for centralized exchanges. These tools are powered by the BOG token.

Bogged Finance was in a bearish trend as early as May, falling from $22.54 on May 12 to $9.26 on May 21. On May 22, BOG came under attack and lost almost all of its value, falling from $8.39 to a low of $0.0001.

An unknown hacker stole $3 million of BOG's $6 million liquidity in a Flash Loan attack.

Bogged Finance has resumed operations, returning free tokens to the original owners and burning over 7.5 million BOG in an attempt to recapture some of the coin's value. A month later, BOG did rise to around the $0.90 mark, but did not move beyond the $1 price.

Pancake Bunny

Bogged Finance isn't the only one that has been hit by instant loan attacks this year. The price of Pancake Bunny (BUNNY) fell from $545.82 to $3.12 in 2022, a decrease of 175%.

In May, a hacker borrowed a large amount of Binance Coin (BNB) from Pancake Swap and used it to manipulate the price of Pancake Bunny. They then dumped the tokens, causing prices to fall. In two days the price fell from 238 to 25 USD.

Pancake Bunny reassured his investors on Twitter, emphasizing that none of the vaults had been hacked and were merely economic losses.

Unlike other attacks, Pancake Bunny was able to return money to investors who lost due to price manipulation. He created a compensation pool based on the number of BUNNY staked before the price dropped. Thanks to this, the company was able to recover more than $18 million.

bEarn

bEarn (BUSD) was also hit by an instant loan attack that wiped out one of its vaults.

The token was launched in early 2022 and peaked at $955.99 before declining to $16, making it the worst-performing cryptocurrency of 2022 (the token is currently worth $16.15 and is ranked #3,094). Although bEarn was already in a bearish trend, the attack accelerated its decline.

On May 16, the attacker took out a $7.8 million emergency loan from Cream Finance and then withdrew the funds from the bVaults account.

The platform lost about $11 million in stablecoins.