What happened to the 35% plunge in CRV prices? Is it a good time to buy at the bottom now?
[Reasons behind the plunge]
Recently, the founder of CRV pledged CRV tokens worth up to $141 million on a lending platform and successfully borrowed $95.7 million in stablecoins to buy villas and other consumption. However, due to the sharp drop in CRV prices, the liquidation mechanism of the lending platform was triggered, resulting in the sale of all the pledged CRV tokens, which in turn exacerbated the price plunge.
[Analysis of the lending and liquidation mechanism]
In order to better understand this incident, we can compare it to a simple lending scenario. Suppose Lao Wang pledged a Rolex watch worth $100 to a pawnshop (i.e., a lending platform) and borrowed $50 from the pawnshop. The two parties agreed that if the market price of the Rolex watch fell to $80, the pawnshop had the right to sell the watch directly at $80, and Lao Wang would not have to repay the $50 loan. This is the basic operating principle of the lending and liquidation mechanism.
[Bottom-fishing strategy analysis]
As to whether it is suitable to bottom-fish CRV at present, we need to make one thing clear: this plunge is mainly due to the liquidation of the founder's tokens, rather than problems with the project's own mechanism. Therefore, in the long run, the CRV project still has certain investment value. As an important infrastructure of the ETH ecosystem, its market value is currently only 300 million, which is relatively low. Therefore, when the price falls to around 0.2, you can consider bottom-fishing in moderation, but it is recommended to set a 5% stop loss point to control risks.
In summary, although CRV has experienced a recent plunge, investors can carefully consider bottom-fishing strategies based on a full understanding of the reasons for the plunge and the value of the project itself. However, there are always risks in investing, and investors should make wise decisions based on their own risk tolerance and investment goals.
#crv又要面临清算