RaveDAO’s RAVE token, a little-known project until last week, has burst onto the scene in dramatic fashion.
It is now the third largest cryptocurrency behind bitcoin and ether (ETH) – not by market value, but by liquidations or forced closure of leveraged futures bets from exchanges.
In the past 24 hours, exchanges liquidated $44 million in RAVE futures positions, the majority of which were bearish (short) bets, according to data source Coinglass. By comparison, liquidations in bitcoin and ether were $229 million and $135 million, respectively.
RAVE’s outsized liquidations follow an extraordinary rally that saw the token rise by around 4,500% in seven days, lifting its market cap from around $60 million to $2.8 billion. To put that into perspective, the value of liquidations over the past 24 hours alone is roughly equivalent to the token’s entire market capitalization just a week ago. This highlights the intensity of the price rise 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 tickets, crypto payments at events, and stakes tied to live show revenue. It also highlights supposed collaborations with major exchanges like Binance and OKX, along with claims of multi-million-dollar revenues to bolster its story of real-world adoption.
Liquidations occur when the market moves against a trader’s position, eroding their margin. If the trader fails to add collateral, the exchange closes the forced position.
Short squeeze
A wave of liquidations in RAVE, especially on short positions, suggests that the rally is driven by a short squeeze, where forced liquidation of bearish bets amplifies upward price momentum. Of the $43.25 million total, over $32 million were short bets.
Some observers claim that the short squeeze may have been deliberately engineered by team members who transferred large amounts of tokens to exchanges, sparking fears of an impending sell-off. These tokens were then allegedly withdrawn just as quickly, driving up prices and triggering a short squeeze.
“The setup: the first $30.58M of $RAVE (~$42M) is transferred to Bitget, signaling a potential dump and luring traders into short positions. Then ~$32M of RAVE is pulled back on-chain over the next 2 days while the spot price is aggressively pumped, wiping out every short that took the bait,” said one unpopular trading group that traded.
Concentration of ownership
It is easier to move tokens like RAVE which are controlled by a small set of wallets. The concentration of ownership often creates a very illiquid market.
Nearly 90% of the token’s supply, 248 million, is held in three secure Gnosis wallets, almost certainly linked to team members, data from Arkham shows.
Gnosis secure addresses are usually attached 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 signatories), and any transaction—such as moving tokens, minting, or selling—requires approval from a threshold of them.
This suspected manipulation has led some observers to call for caution going forward.
“It will dump 95%+ using the same old playbook over and over and retail will be destroyed as always,” said a pseudonymous observer, Columbus, on X.
