The recent price surge of $RARE (SuperRare) certainly raises questions about whether the pump was pre-planned, particularly in light of certain market activities that occurred before its listing on Binance Futures. Here’s a closer look at what happened and the possible implications:
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Suspicious Activity Before the Binance Listing
- Market Maker Accumulation: According to data from Arkham Intelligence, GSR, a known market maker, began accumulating aRARE RARE ssively weeks before Binance announced its futures listing on August 15th. This kind of pre-listing accumulation by a market maker can suggest insider knowledge or at least a calculated bet on the token’s upcoming demand.
- Low Volume Prior to Listing: Before the Binance listing, SuperRare was seeing daily volumes in the modest range of $3K to $10K. This low volume might indicate that the market wasn’t widely interested in $RARE at that point, making the subsequent surge in interest and price after the listing all the more striking.
Price Surge Post-Listing
- Immediate Pump: After $RARE was listed on Binance, the token experienced a massive pump, rising 200% since the listing. Such a rapid increase is often driven by a combination of new market exposure, speculative interest, and strategic buying, especially if smart money had already positioned itself.
- Negative Funding Rate: Interestingly, the funding rate for on Binance Futures has been negative (-2%), despite the price increasing by 100% in just 24 hours. A negative funding rate usually implies that more traders are shorting the asset than going long. However, in this case, those who were long $RARE not only profited from the price appreciation but also earned funding payments.
How Smart Money Profited
- Spot Accumulation: The smart money, including entities like GSR, likely accumulated on spot markets well before the Binance Futures listing, positioning themselves to benefit from the expected price pump.
- Long Futures Positions: Once was listed on Binance Futures, they likely opened long positions to capitalize on the anticipated rise in price, doubling down on their spot market gains.
- Earning from Negative Funding: The negative funding rate meant that traders with long positions were being paid to hold those positions, adding another layer of profit on top of the price increase.
Retail Impact and Lessons
- Retail Traders Beware: This situation is reminiscent of past events where retail traders get caught in the frenzy, buying into an asset after it has already pumped significantly. Without knowledge of the underlying factors driving the price or the timing of market maker activities, many retail traders can end up buying at inflated prices and subsequently suffer losses when the market corrects or when insiders begin to take profits.
- TRB Parallel: The comparison to $TRB (Tellor) is apt, as it also experienced a significant pump followed by retail traders getting "rekt" (suffering heavy losses). Both cases highlight the risks of chasing pumps driven by smart money that had pre-positioned themselves.
Conclusion
The evidence suggests that the RARE was not entirely organic and was likely influenced by pre-planned accumulation and strategic market activities by entities with deep pockets and insider knowledge. Retail traders should exercise caution when engaging with assets that show such sudden, sharp movements, as the underlying forces often have little to do with the asset’s intrinsic value or technical/fundamental analysis.