South Korea's largest exchange, was the main spot participant, with a trading volume of $717 million on the previous day.
The crash occurred after the Binance exchange launched the HIFI perpetual contract on September 16.
The price of #Hifi Finance (HIFI) fell following a tremendous seven-day gain, which was eagerly anticipated by token holders after a long period of consolidation. The surge and fall occurred as the price of Bitcoin (BTC) remained stagnant, with the larger market looking for a stimulus. Meanwhile, specialists believe that now is the moment to invest in cryptocurrencies.
The price of Hifi Financing fluctuates dramatically.
On the #Binance Exchange, the price of Hifi Finance (HIFI) versus Tether (USDT) stablecoin increased 362% in the previous seven days to conclude the September 16 trading session at $2.320. This came after it broke over the psychological mark of $2.5000 to hit an intraday high of $2.635.
The boom in Hifi Finance was connected to a large increase in the asset's trading volume on the Korean exchange Upbit. On Saturday, Upbit Korea accounted for around 65% of total asset transaction, with Wu Blockchain claiming a 208% increase and conceding that Upbit led the spot trading front, with up to $717 million in trading volume over the previous 24 hours. Nevertheless, the price has dropped by roughly 40% in the last day, owing to Binance's launch of the HIFI perpetual contract.
Surprisingly, there was a large difference in $HIFI futures and spot pricing. HIFI futures were trading at a -40% premium to spot pricing. This disparity is unusual and perplexing, raising concerns about Hifi Finance price dynamics.
A perpetual contract is a derivative similar to a futures contract, only it does not have an expiration date. This is a contract between two parties to sell or acquire an asset at a defined price with no expiration date. Traders may simply speculate on the asset's value using leverage without worrying about their futures contracts expiring.
While perpetual contracts increase profits, they have a disadvantage in that if the asset price falls, it liquidates the equity of traders who took long positions while completing their contracts more faster.
Potential cause of #HIFI decline due to Binance exchange transfer
Perpetual contracts provide additional liquidity while maintaining narrower spreads. Most crucially, they are less susceptible to market manipulation. Korean traders have already been connected with pump-and-dump behaviour, with CryptoQuant CEO Ki Young Ju admitting that Korean traders like pumping and dumping cryptocurrencies in particular.
Young Ju ascribed it to the region's "very tight capital restrictions, which prevent arbitrage possibilities across worldwide exchanges."
