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Key Insights:
- Over $200 Million estimated debt of THORChain caused a panic selloff around RUNE.
- Node operators have paused the network operations for 90 days to address debt issues.
THORChain (RUNE) price witnessed a panic selloff in the last few hours, losing more than 10% of its value. The decline comes amid reports of the chain’s insolvency.
Market rumors about insolvency have caused investors to panic. Sharp selling pressure has led to a massive decline in the THORChain price.
At press time, the RUNE price was trading at $2.26. The token noted a decline over 8.90% in the past 24 hours and a 42% decline over the past seven days. Its market cap has dropped to $792.61 Million, ranking 108th in the crypto market.
THORChain Financial Crisis: Insolvency Looms
The decentralized liquidity protocol, THORChain, recently paused its THORFI operations. The network did this due to financial concerns relating to a $200 Million debt problem.
Users have borrowed $111 Million of digital assets from THORChain’s protocol. At the same time, $98 Million worth is currently locked in the saver’s vault.
Users have deposited $57 Million in Bitcoin and $16 Million in Ethereum. The THORChain dashboard statistics stated the same thing.
As a result, node validators decided to pause the network for a minimum of 90 days to resolve the debt issues. Pseudonymous Thorchain community user TCB demonstrates that the network faces “insolvency.”
TCB highlighted on X that $199 Million worth of user liabilities present challenges for THORChain. The token is facing hurdles to fulfill its ongoing obligations sustainably.
According to TCB, THROChain now achieves its lending promises by minting RUNE coins and selling them into THORChain’s liquidity pools.
THORChain Price Prediction: Is a Further Drop Inevitable?
Over the past few sessions, THORChain price has been facing selling pressure and witnessing severe underperformance. Despite the larger market’s positive mood, RUNE crypto traded bearishly.
The RUNE price dropped more than 40% in the past seven days. Furthermore, the token has fallen to the August 2023 lows, indicating an extreme selloff wave.
The Relative Strength Index (RSI) clearly outlined the selling pressure. It nosedived to the oversold region and had a reading of 30, indicating that the altcoin was facing a panic selloff.
A bearish crossover was exhibited on RSI and MACD, which guided a panic selling pressure. The severe follow-up on selling and a streak of red candles conveyed that bulls had lost their strength. Also, the token may lose further gains in the short term.
Moreover, the Average Directional Index (ADX) line soared above the 30 threshold. This indicated that the bears had gained the upper hand, and the bearish trend settled.
Per the price action, the THORChain price has breached significant support of $2.50. It has fallen to the most critical support zone of $2. If bears succeed in breaking the $2 mark, another 8-10% fall could be next.
Additionally, the downtrend was confirmed by a death crossover between the 20-day and 200-day EMA mark. This highlighted a significant trend reversal.
The downtrend may continue until the RUNE price does not reclaim the $3 mark. Moving ahead, every pullback may allow exiting in the short term.
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of monetary loss.
