Loom Network’s Price Surge and Subsequent Selloff
The price of the LOOM cryptocurrency experienced a massive surge, rallying 1000% since September. It went from trading within the range of $0.04-$0.06 to reaching an all-time high (ATH) of $0.343. This sudden price rise gained attention and made LOOM trend on CoinMarketCap, placing it among the top 100 cryptocurrencies in terms of market capitalization.
It is speculated that Korean traders on the UpBit exchange may have artificially pumped the LOOM price for a quick profit, leading to a subsequent 70% selloff. This resulted in significant losses for those who bought at the peak.
However, despite the price surge, on-chain data revealed that the Loom Network’s fundamentals were weak, with developer activity slowing down in recent years. Furthermore, confusion arose when a company named Loom was acquired by Atlassian, causing increased market volatility.
About Loom Network
Loom Network is an interoperability chain that has been in production since 2018. It offers scalability and usability for decentralized applications (DApps) and supports Bitcoin, Ethereum, Binance Chain, and TRON.
Reasons Behind LOOM Price Movement
The LOOM project gained attention when its price began to soar on Binance and the Korean exchange UpBit. Previously, LOOM had been trading within a narrow range between $0.04 and $0.06 for several months. However, on September 16, the price started to skyrocket on UpBit and spread to Binance.
This drastic increase in price made LOOM a trending cryptocurrency on CoinMarketCap and propelled it into the top 100 cryptocurrencies by market capitalization.
Pump-and-Dump Scheme on UpBit
It is believed that Korean traders on UpBit may have engaged in a pump-and-dump scheme to profit from the LOOM price surge. This led to a bubble in the price, with LOOM reaching an ATH of $0.343 before experiencing a 70% selloff.
Unfortunately, those who bought near the top and didn’t exit quickly faced significant losses. This pump-and-dump scheme lasted for about a month, allowing the market to evaluate the Loom Network’s true value.
Loom Network’s Weak Fundamentals and Market Confusion
On-chain data from Santiment revealed that the surge in LOOM price lacked a strong foundation in fundamentals. Developer activity on the Loom Network had been slowing down over the past few years.
Furthermore, market confusion arose when Atlassian, a $3.5 billion software giant, announced its acquisition of a video messaging company also named Loom. This added to the volatility and uncertainty surrounding LOOM.
Pump-and-Dump Trading in South Korea
Korean exchanges are known for their pump-and-dump trading activities due to strict capital controls that limit arbitrage opportunities between global exchanges. CryptoQuant CEO Ki Yung Ju has previously highlighted this issue.
Hot Take: Lessons from Loom Network’s Price Surge and Selloff
The LOOM cryptocurrency experienced a significant price surge followed by a sharp selloff, highlighting the risks associated with pump-and-dump schemes. It is crucial for investors to thoroughly evaluate the fundamentals of a project and be cautious of sudden price movements driven by speculation.
In addition, market confusion caused by similar company names can contribute to increased volatility. As an investor, it is important to stay informed and understand the underlying factors affecting the cryptocurrency market.
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