In a surprising turn of events, the ALPACA token surged by more than 650% within just a few days following Binance’s announcement that it would delist the asset. The rally, driven by a short squeeze and a temporary suspension of new token issuance, defied typical market expectations.
ALPACA Price Action: Short Squeeze and Token Issuance Suspension
On April 24, 2025, Binance – the world’s largest exchange, announced that it would delist all spot trading pairs involving ALPACA on May 2, 2025. Typically, such announcements lead to a price drop due to panic selling. However, ALPACA’s price movement defied expectations.
Data from TradingView shows that ALPACA surged from $0.029 to a peak of over $0.21 within 48 hours. Trading volume also spiked, indicating a surge of investor participation.
However, by April 29, the trend reversed sharply. In just three hours, ALPACA plunged by 70%, falling from $0.24 to a low of $0.066, wiping out most of its previous gains and raising concerns about the sustainability of the rally.
The sudden price spike was largely attributed to a “short squeeze.” Following the delisting announcement, many traders opened short positions, anticipating a drop in ALPACA’s price.
But when the price unexpectedly rose, those short positions were forced to cover, buying back tokens to avoid further losses which amplified buying pressure and pushed prices even higher.
Another major factor was Alpaca Finance’s decision to suspend its plan to issue additional ALPACA tokens. According to the team, the project had originally intended to provide more liquidity to market makers. However, the team scrapped the plan after receiving negative community feedback. This indirectly tightened token supply and further fueled upward price momentum.
Lessons from the VOXEL Case
The case of ALPACA is not unique. Previously, the VOXEL token also experienced a sharp pump immediately after delisting news broke. However, the situation with VOXEL was more complex, as Bitget discovered a group of actors manipulating the market and illegally profiting over $20 million. Bitget issued eight legal notices, froze the assets of related accounts, and pledged to redistribute 100% of the recovered funds to users via airdrops.
While ALPACA has recently shown impressive short-term growth, the risks for investors remain high. The delisting will significantly reduce ALPACA’s liquidity in the coming period, making it more difficult to buy and sell the token.
Binance will proceed with delisting the trading pairs ALPACA/USDT, ALPACA/BTC, ALPACA/BNB, and ALPACA/BUSD starting at 03:00 UTC on May 2, 2025.
Read more: A Shocking Breakthrough from a Vote to Delist Project VOXEL
Conclusion
The ALPACA episode underscores both the potential for rapid gains in distressed tokens and the inherent dangers of chasing short-term pumps. Although the project momentarily benefited from a suspension in token issuance and forced short covering, the upcoming delisting will likely result in thinner liquidity and greater price instability.
