THORChain token forms bearish flag pattern despite surge in swap volume.

THORChain's RUNE price has formed a bearish flag pattern despite a surge in swap volume. This suggests further downside despite recent activity on the network, which was linked to the Bybit hack. RUNE's price has been in a steep downtrend since peaking at $7.50 in December and has fallen below key support levels, increasing the risk of a big breakdown.

Introduction:

The decentralized cross-chain protocol, Thorchain, is currently grappling with a significant financial crisis. The platform, known for its liquidity services, has faced insolvency concerns, leading to the pause of its lending service, THORFI [1]. This development has sent shockwaves through the crypto community, with RUNE, Thorchain's native token, plummeting by more than 30% [1]. This article delves into the factors contributing to Thorchain's financial instability, the implications of RUNE's price drop, and the potential parallels with the Terra (LUNA) collapse.

Factors Contributing to Thorchain's Financial Instability:

Thorchain's financial crisis was triggered by a surge in Bitcoin borrowing during a period of low prices. This demand led to a need for more RUNE tokens to be minted, but the Thorchain network struggled with liquidity issues. As a result, the price of RUNE began to drop rapidly, causing panic across the platform [1]. To prevent further market instability, Thorchain's developers made the decision to pause the lending function of its THORFI platform [1].

The Parallels with Terra (LUNA):

Some analysts are drawing parallels between Thorchain's current situation and the collapse of Terra in 2022. Both platforms experienced liquidity issues, which compounded the problems. While Thorchain's decentralized network is still operational and generating transaction fees, concerns about its future viability are growing [1].

Implications of RUNE's Price Drop:

The price of RUNE has fallen by over 30% in just a few days, bringing it back to levels not seen since 2020 [1]. The RUNE/BTC trading pair has experienced a dramatic 96% drop from its all-time high in 2021, raising red flags for many market participants [1].

Conclusion:

Thorchain's financial crisis, marked by insolvency concerns and the pause of its lending service, has sent RUNE's price plummeting by more than 30%. While some are drawing parallels with the Terra (LUNA) collapse, it remains to be seen how Thorchain will navigate this challenging period. As the situation unfolds, the crypto community will be closely watching Thorchain's progress.

References:

[1] TheCurrencyAnalytics. Thorchain Faces Crisis as Rune Price Drops 30% and ThorFi Paused. 15 March 2023. https://thecurrencyanalytics.com/altcoins/thorchain-faces-crisis-as-rune-price-drops-30-and-thorfi-paused-157160