RaveDAO’s RAVE token, a little-known project until last week, has burst onto the scene in spectacular fashion.
It is now the third largest cryptocurrency behind bitcoin and ether (ETH), not by market capitalization, but by liquidations or forced closures of leveraged futures bets by the exchanges.
In the last 24 hours, exchanges have liquidated $44 million worth of RAVE futures positions, the majority of which were bearish (short) bets, according to data source Coinglass. In comparison, settlements in bitcoin and ether amounted to $229 million and $135 million, respectively.
RAVE’s huge sell-offs follow an extraordinary rally, with the token rising approximately 4,500% in seven days and raising its market capitalization from around $60 million to $2.8 billion. To put this into perspective, the value of liquidations in the last 24 hours alone is roughly equivalent to the total market capitalization of the token just a week ago. This highlights the intensity of the price increase and the degree of speculative activity driving it.
RaveDAO markets itself as a Web3-based music platform that aims to merge EDM culture with blockchain tools, including on-chain ticket sales, crypto payments at events, and betting tied to revenue from live shows. It also highlights alleged collaborations with major exchanges like Binance and OKX, along with multi-million dollar revenue claims to strengthen its real-world adoption story.
Liquidations occur when the market moves against a trader’s position, eroding their margin. If the trader does not add collateral, the exchange forcibly closes the position.
short squeeze
A wave of liquidations in RAVE, particularly in short positions, suggests that the rally is being driven by a short squeeze, where the forced reversal of bearish bets is amplifying bullish price momentum. Of the total of $43.25 million, more than $32 million were short bets.
Some observers allege that the short squeeze may have been deliberately engineered by team members who transferred large amounts of tokens to exchanges, raising fears of an imminent sell-off. Those tokens were then reportedly withdrawn just as quickly, driving up prices and causing a brief squeeze.
“The setup: The first $30.58 million of $RAVE (~$42 million) is transferred to Bitget, signaling a possible dump and causing traders to take short positions. Then, ~$32 million of RAVE is taken off-chain over the next 2 days as the spot price is aggressively pumped, eliminating every short that took the bait,” noted a popular trading community on X called Evening Trader Group.
Ownership concentration
It is easier to move tokens like RAVE, which are controlled by a small set of wallets. Concentration of ownership often creates a highly illiquid market.
Nearly 90% of the token supply, 248 million, is held in three secure Gnosis wallets, almost certainly associated with team members, Arkham data shows.
Gnosis secure addresses are generally tied to project teams because they use standard multi-signature (multi-signature) smart contract wallets to manage crypto treasuries. In most Web3 projects, a vault is set up with multiple “owners” (team members, founders, or signers), and any transaction (such as moving tokens, minting, or selling) requires approval from a threshold of them.
This alleged manipulation has led some observers to call for caution in the future.
“You’ll get rid of the 95%+ using the same old playbook over and over again, and retail will go bankrupt as always,” said one pseudonymous observer, Columbus, on X.
