Prior to today, Yearn.finance (YFI) was one of the worst-performing cryptocurrencies of the past two months. It had dropped 80 percent from its all-time high due to a number of bad PR events, coupled with massive short activity from large investors that saw a decline coming in DeFi.
The short activity was evident due to on-chain trends spotted by analysts in the space.
Some users were depositing large amounts of Wrapped Bitcoin or stablecoins as collateral into Aave, borrowing YFI, then sending those coins to centralized exchanges presumably to be sold. This is a decentralized low-leverage short that allows investors with large amounts of stablecoins and Bitcoin to bet on an asset going down without the complications of futures.
Some large funds in the space were participating in these efforts, along with some larger whales that were not tied to any fund or public identity.
With all this being on-chain, many investors took notice of the shorts, similar to the Zeus Capital situation.
Squeezing the shorts
After investors in the space began to bring attention to YFI shorts opened through Aave, members of the DeFi community together to form a group whose name is a cheeky reference of Yearn.finance’s products, which are all preceded with a “y”.
Members of the group, named ySqueeze, include fund managers in the space and popular traders.
The idea with the group was to bring together fans of YFI to collective liquidate those that shorted the cryptocurrency. All eyes were on one short in particular, which was poised to be liquidated once Yearn.finance began recovering on Thursday evening.
While it isn’t clear what effect the group had on the YFI price, the squeeze took place on Friday evening in one of the fastest and most unexpected moves in the history of the space.
From the lows to the highs of the move, YFI gained 140 percent — all in the span of 36 hours. At the peak of the squeeze, the coin gained $3,000 in the span of 90 seconds… no joke. The chart below does not show this well as it only depicts the price of the coin at the end of a candle, but you get the point.
Source: YFIUSD from TradingView.com
Even after a retracement, YFI is still up 60 percent in the past day and 105 percent since the recent lows of $7,500.
Considering the absurdity of this move, it is no surprise that members of the ySqueeze party are celebrating online.
Trader “Crypto Dog” commented on the group and the YFI pump:
This $YFI squeeze is what happens when you put together hundreds of the richest degens in crypto and point them at one target.
— The Crypto Dog📈 (@TheCryptoDog) November 7, 2020