TL;DR
- Loom Network’s Price Surge: The LOOM cryptocurrency saw a significant price increase, rallying 1000% since September, moving from a range of $0.04-$0.06 to an all-time high (ATH) of $0.343. The sudden price rise made it trend on CoinMarketCap and placed it among the top 100 cryptocurrencies in terms of market capitalization.
- Speculated Cause of Bull Run and Selloff: It’s believed that Korean traders on the UpBit exchange may have artificially pumped the LOOM price for a quick profit. This pump-and-dump resulted in a subsequent 70% price selloff, leaving many who bought at the peak with significant losses.
- Underlying Issues with Loom Network: Despite the price surge, on-chain data indicated that the Loom Network’s fundamentals were weak, with developer activity slowing in recent years. Furthermore, confusion arose when a $3.5 billion company, Atlassian, acquired a differently-related company named Loom, leading to increased market volatility.
Loom Network is an interoperability chain in production since 2018. It provides scalability and usability for DApps, with support for Bitcoin, Ethereum, Binance Chain, and TRON.
Here’s why LOOM price is down by so much this week.
LOOM Price Rallied 1000% Since September
The project gained some notoriety over the last month when LOOM price began to soar on Binance and Korean exchange UpBit.
For months leading up to mid-September, LOOM traded range-bound between $0.04 and $0.06. Then, suddenly, on September 16, LOOM price began to fly up the chart in a frenzy that started on UpBit and spread to Binance.
The drastic price increase made LOOM a trending crypto on CoinMarketCap.
An October 12th post noted that, “Loom Network has made its way among the top 100 cryptocurrencies in terms of market capitalization.”
So what caused the bull run on Loom Network tokens in the first place and the subsequent 70% selloff this week?
Loom Network Pumped and Dumped on UpBit
According to FXStreet, it may have been Korean traders pumping the coin for a quick profit.
That’s how it looks after the LOOM price bubble from $0.046 to an ATH of $0.343 popped on Sunday, October 15:
“Meanwhile, the LOOM token ranks as the leading bag on the Korean exchange Upbit, spurring concern considering the region’s traders are infamous for pump-and-dump schemes.”
After LOOM tokens fell some 70%, anyone who bought in near the top and didn’t make a hasty exit got left holding a bag on UpBit or Binance.
The LOOM pump didn’t last longer than a month because that was enough time for the market to make a serious evaluation of the Loom Network.
LOOM price crashed as traders scooped the pump
On-chain data from Santiment revealed:
“…this surge lacked a foundation in strong fundamentals, with on-chain data showing that developer activity on the Loom Network has slowed over the past few years.”
Adding to the confusion and mayhem, just as LOOM price reached its ATH, $3.5 billion software giant Atlassian announced a $975 million acquisition of a video messaging company with the same name.
Pump-and-dump trading is common on Korean exchanges. CryptoQuant CEO Ki Yung Ju has noted in the past that:
“It happens because South Korea has very strict capital controls, blocking arbitrage opportunities between global exchanges.”
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