Curve's CRV Token Turns Volatile as Exchange's Balance Hits Record High

The token sank to a two-year low of 40 cents early Tuesday before quickly bouncing back to 53 cents.

AccessTimeIconNov 22, 2022 at 12:54 p.m. UTC
Updated Nov 22, 2022 at 2:45 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

CRV, the governance token of decentralized exchange Curve, has turned volatile amid a surge in the number of coins held at centralized trading platforms.

The token dropped 17% to a two-year low of 40 cents early Tuesday before erasing the losses with a V-shaped recovery. At press time, the token had returned to positive territory for the day, changing hands at 53 cents, according to CoinDesk data.

The number of CRV held in centralized exchange wallets has increased by 70% to a record 148.9 million this month, with the tally surging by 46% in the past 24 hours alone, according to data tracked by Glassnode.

In other words, the number of CRV available for liquidation on centralized exchanges has substantially increased. Investors typically transfer coins from their wallets to exchanges when intending to sell their positions.

Developments in the CRV market are notable, as Curve, which specializes in stablecoin swaps, is the biggest source of liquidity in decentralized finance (DeFi). That means any issue at Curve can have broader market implications.

The number of CRV held on centralized exchanges has jumped to a record high.
The number of CRV held on centralized exchanges has jumped to a record high.

CRV's exchange balance has surged amid reports of a large investor transferring large number of borrowed tokens to centralized exchanges.

According to several Twitter-based researchers, including Lookonchain, the investor recently borrowed 20 million CRV from the DeFi lending giant Aave and transferred half of that to OKEx, possibly to sell the cryptocurrency. The balance held on OKEx has increased by 11.3 million this month, according to Glassnode data.

The latest edition of the Curve newsletter has referred to the activity as a "big short".

CRV's near-term prospects appear to be bleak as the uptick in the exchange's balance is accompanied by a lack of incentive to hold the token or provide liquidity on Curve.

"While Curve was initially a winner after FTX, a lack of user engagement will now hurt them in the short term," Markus Thielen, head of research and strategy at crypto-services provider Matrixport, said, referring to the collapse this month of crypto exchange FTX. "There is less interest from users to provide their tokens into liquidity pools and even lock them up in terms of total value locked."

"Genesis and DCG are adding to the risk of a fire sale for individual tokens," Thielen added, referring to Genesis Global Trading and its parent, Digital Currency Group, which also owns CoinDesk. Genesis is facing liquidity issues.

Curve saw massive outflows early this month.
Curve saw massive outflows early this month.

Curve saw massive outflows between Nov. 8 and Nov. 13 as FTX went bust, injecting volatility and uncertainty into markets. The total value locked in Curve has declined to $3.78 billion, the lowest since February 2021.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.

Omkar Godbole

Omkar Godbole is a Co-Managing Editor on CoinDesk's Markets team.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.