[Feature] A Life and Death Battle Between CRV Longs and Shorts

On November 22, the data analytic agency Lookonchain tweeted "A giant whale address borrowed 20 million CRV (approximately US$9.9 million) from Aave and transferred 10 million CRV (approximately US$4.9 million) to OKX. In the past seven days, the address has borrowed 37 million CRV from Aave, at the same time the CRV price has dropped from $0.625 to $0.464. It seems that the address is shorting and dumping the borrowed CRV profit."

After the news report by several prominent media, a long-short battle for CRV broke out. In fact, as early as November 13, the war had already begun.

Initial hints of war
Whether it was a sudden initiative or a long thought-out plan, it is currently impossible to know the exact duration that "short sellers" have been in ambush, but the clues of this war should start from November 4.

On November 4, the price of CRV rose straight from around US$0.8 to US$1.069. This is the highest price and the largest increase in CRV since September 18. Keep in mind that from September 18 to November, the price of CRV fluctuated around US$0.8~0.9.

This price increase has kept the price of CRV fluctuating around $1 for the next four days, but this has also signaled incoming danger.

On November 9th, either due to market panic caused by FTX’s implosion or other reasons, the price of CRV fluctuated greatly. On that day, CRV fell from a maximum of 0.97 US dollars to 0.66 US dollars, a drop of more than 20%.

On November 10, market panic worsened, and the price of CRV dropped again, reaching as low as $0.53.

During the next three days, market sentiment stabilised, and the price of CRV also fluctuated around $0.6 until the short sellers started to act.

Ambushed by short sellers

What we can observe was that the ambush started on November 13th. Before that, it was not clear if there were any prior ambushes.

On November 14, “short sellers” borrowed 4 million CRVs from Aave in three tranches. The price of CRVs fluctuated violently on that day. %.

On November 15, short sellers continued to borrow another two million CRV from Aave. However, luckily possibly due to the large buying interest, the price of CRV on that day has been stable with fluctuations of only around 5%, and CRV has been trading stable at $0.6 with highs of $0.63.

On November 16, there were no actions from short sellers, and the price of CRV remained relatively stable, and in a downward trend in accordance with FTX’s implosion and red markets.

On November 17, taking advantage of the downward trend due to market shock, short sellers acted again and mortgaged six million CRV from Aave in three installments, continuing the short squeeze. The price of CRV fell sharply below $0.6 and entered the price range of $0.5.

From November 18 to November 19, there were no significant actions from short sellers. However, the sharp decline in price had increased the difficulty for CRV to break $0.6 even with large buying pressure. It remained trading sideways at around $0.55.

On November 20, the price of CRV had just stabilized, prompting short sellers to borrow again another five million CRV from Aave to sell and short. As a result, CRV broke through $0.5 support on the same day and dipped to a minimum of $0.48, creating a bearish pin bar pattern.

On November 21, affected by yesterday's dump, the price of CRV did not improve, and remained fluctuating around US$0.5.

During the week-long short selling, a total of 17 million CRV were borrowed through eight loans. The short sellers pushed the price of CRV down from US$0.6 to around US$0.5, with a weekly drop of more than 20%.

During this period, any upward momentum of CRV was immediately and severely suppressed by short sellers, causing investors’ sentiments towards CRV to turn from bullish to bearish, and the overall situation is relatively pessimistic.

Assault

With the help of the panic in the general crypto markets, after a week-long short-selling ambush, the short seller finally revealed his true attack plan on November 22.

On November 22, the war horn officially sounded. Since CRV was in a long-term descending channel, the project team and their relevant investment backers had to take action to protect the price and break out of the channel.

At 5am in the morning, CRV began to fluctuate upwards. Seeing this price move, short sellers began to attack head-on. At 5:19am, short sellers first borrowed 20 million CRV from Aave, and quickly transferred them to the exchange to dump but due to immense buying pressure from team and guardian angels, CRV remained in an upward trend. At 7:00 am, CRV broke through the blockade of short sellers and stood strong at the $0.5 mark.

At 8am, short sellers borrowed another 10 million CRV again, and then transferred them to the exchange. At the same time, they suppressed the price trend of CRV during this period. CRV made steady progress, consolidated its position at the $0.5 mark and accumulated rising power.

From 9am to 10am, CRV stabilised above $0.5 and started to rise. During this period, the short sellers once again borrowed 30 million CRV to add more selling pressure.

From 10am to 11am, the price of CRV has risen to US$0.53, and the short sellers split borrowed 10 million CRV from Aave to complete their final accumulation of power. This would be their last loan of CRV from Aave.

At 12pm, the price of CRV had risen from below US$0.5 to US$0.54. During this period, the short sellers finalised all their loans and held more than 75 million CRV. Shortly, they began to exert extreme selling pressure on CRV defenders.

From 12pm to 6pm, short sellers launched a fierce offensive to suppress CRV. CRV fell steadily, and at the same time, they used MEV bots to sell CRV and consume its liquidity.

At 6pm, the defenders lost to the short sellers and collapsed, with the price falling below US$0.4.

The Epic Retaliation and Reversal

Fortunately, during this period of sell side pressure and onslaught, CRV defenders from the project team and huge backers also completed their power accumulation for CRV.

From 7pm to 1am the next day, CRV began to regain its momentum and climbed steadily. During the period between 7pm and 8pm, there was even a substantial increase of 20%. Finally, at 9pm, CRV had an increase of 53%, hovering above $0.6, liquidating short sellers for a whopping $6.4 million that day.

During this period, Aave's loan interest rate had also soared to 1502%, and facing no success with their shorts, short sellers had no more ammunition to borrow more from Aave to continue the battle.

At 1am in the morning of the next day, CRV pulled the market straight to $0.739, completely destroying the short sellers with an increase of nearly 90%, and maintained a stable price above $0.6, thus concluding the whole battle, with CRV defenders emerging victorious.

So far, the short sellers have been subdued.

Conclusion

Although this war ended with the defeat of shorts, users who witnessed the battle were curious about the motives of these sellers.

Shenyu, the co-founder of F2Pool, interpreted the battle below.

This time, short sellers borrowed CRV on Aave, and then shorted CRV on the market, until the position mortgaged by the founder of CRV ($0.249) was broken down and liquidated. Then made a profit by selling a huge amount of CRV on hand while controlling veCrv.

Now, who is the short seller in the article? At present, it is the address starting with 0x57e0, but specifically, there should be more than one short seller since those that have attacked Mango Markets previously have also announced participation in this CRV short attack. Hence pointing to the fact that this could likely be a coordinated team effort.