YFI in Deep Technical Trouble Below 12K, Analyst Warns after 65% Drop
No traders may want to purchase Yearn Finance (YFI) after it plunges below $12,000, according to an independent analyst.
The pseudonymous entity said in a tweet on Wednesday that the Yearn Finance’s native token “is dead” if it fails to hold above the said support level. In a separate tweet, he published an outlook that showed YFI attempting to stay afloat inside a price floor zone (as shown in the chart below).
Yearn Finance is attempting to rebound from the blued range. Source: YFIUSD on TradingView.com
The image above depicts YFI in a medium-term downtrend. It started after the token established its record high near $44,000 – and lately showed signs of bottoming out after the price hit $12,220.
Meanwhile, many fundamental and technical factors contributed to YFI’s sharp slide. For starters, the token had rallied too rapidly amid the booming craze for decentralized finance projects. It demanded a natural correction on profit-taking sentiment alone.
Nevertheless, YFI/USD kept forming lower lows as liquidity to drive the prices up dried up in the upper crypto brass. For instance, a period of pair’s downside correction strongly coincided with a plunge in the Bitcoin and Ethereum market.
Those top cryptocurrencies, in turn, slid because of a delay in the second coronavirus stimulus package in the US. The aid would have brought at least $1.6 trillion into the economy, thereby hurting the US dollar and raising the demand for riskier assets.
What further fueled the YFI’s bearish momentum is Andre Cronje, the founder of Yearn Finance. About three weeks ago, he launched a series of new smart contracts for his upcoming gaming project Eminence Finance.
The association of Mr. Cronje with a new game startup excited YFI holders. They expected to make healthy returns from the project. So they decided to deploy capital into the Eminence contracts, only to find later that all those contracts had a bug.
1/ A timeline of events in the EMN scandal
Andre Cronje, founder of Yearn Finance, hyped a surprise launch.$emn $yfi pic.twitter.com/qsGhLOrZIw
— EMN Investigation (@EMNInvestig) October 10, 2020
That small error wiped about $15 million worth of DAI stablecoin. Later, to offset those losses, Eminence investors sold their YFI holdings en masse, bringing the price further lower below the $20K-support level.
Now those who suffered significant losses are reportedly planning to sue Mr. Cronje for deploying faulty smart contracts. The claims remain unfound.
The low fundamental outlook for the Yearn Finance token is leaving technical analysts bearish as well.
A pseudonymous trader noted that YFI has every bit of possibility to hit $10,000 during the fourth quarter, noting that it may happen by next week.
“The $YFI Chart has been beautiful,” he said. “Unfortunately, the bear trend seems like it will sustain for another week or so, a historically weak bounce than previous bottoms. I would not be surprised to see sub 10k in Q4.”
YFI/USD was trading near $14,650 at the time of this writing, down 10.5 percent in the last 24 hours.