RaveDAO’s RAVE token, a little-known project until last week, burst onto the scene in a big way.
It is now the third largest cryptocurrency behind bitcoin. and ether (ETH) – not by market capitalization, but by liquidations or forced closures of leveraged futures bets by exchanges.
Over the past 24 hours, exchanges liquidated RAVE futures positions worth $44 million, the majority of which were bearish (short) bets, according to data source Coinglass. For comparison, Bitcoin and Ether liquidations were $229 million and $135 million, respectively.
RAVE’s massive liquidations follow an extraordinary rally, with the token surging approximately 4,500% in seven days and pushing its market capitalization from approximately $60 million to $2.8 billion. To put this into perspective, the value of liquidations in the last 24 hours alone is roughly equivalent to the total market cap of the token just a week ago. This highlights the intensity of the price surge and the degree of speculative activity driving it.
RaveDAO bills itself as a Web3-based music platform that aims to merge EDM culture with blockchain tools, including on-chain ticketing, crypto payments at events, and staking tied to live show revenue. It also highlights alleged collaborations with major exchanges like Binance and OKX, as well as claims of multi-million dollar revenues to bolster its real-world adoption story.
Liquidations occur when the market moves against a trader’s position, eroding their margin. If the trader fails to add collateral, the exchange forcibly closes the position.
Short press
A wave of liquidations in RAVE, particularly on short positions, suggests that the rally is fueled by a short squeeze, where the forced unwinding of bearish bets amplifies bullish price momentum. Of the total $43.25 million, more than $32 million were short bets.
Some observers say the short squeeze may have been deliberately engineered by team members who moved large amounts of tokens to exchanges, sparking fears of an imminent sell-off. These tokens would then have been withdrawn just as quickly, driving up prices and triggering a short squeeze.
“The setup: The first $30.58 million of RAVE (~$42 million) is transferred to Bitget, signaling potential dumping and incentivizing traders to take short positions. Then, ~$32 million of RAVE is removed from the chain over the next 2 days while the spot price is aggressively pumped, eliminating every short that took the bait,” noted a popular trading community on X called Evening Trader Group.
Concentration of ownership
It is easier to move tokens like RAVE, which are controlled by a small set of wallets. Concentration of ownership often creates a highly illiquid market.
Nearly 90% of the token supply, or 248 million, is held in three Gnosis secure wallets, almost certainly associated with team members, according to Arkham data.
Gnosis secure addresses are typically linked to project teams as they use standard multi-sig (multi-sig) smart contract wallets to manage crypto treasuries. In most Web3 projects, a vault is set up with multiple “owners” (team members, founders, or signers), and any transaction, such as moving tokens, minting, or selling, requires approval from a number of them.
This alleged manipulation has prompted some observers to call for caution moving forward.
“He will dump over 95% of it by using the same old playbook over and over again, and retail will be destroyed like always,” said a pseudonymous observer, Columbus, on X.
