- Liquity price jumped sharply on Tuesday after Binance listing.
- Historically, these post-listing gains tend to be short-lived.
- Liquity is a platform that provides LUSD for DeFi lending.
Liquity price surged to the highest point since April 2022 after Binance decided to list the coin. LQTY, its native token surged by more than 160%, making it the best-performing cryptocurrency. Its market cap surged to more than $260 million, according to CoinMarketCap.
Binance listing boosts Liquity
Binance is the biggest company in the crypto industry. It is an exchange that has billions of client assets and millions of clients around the world. Therefore, it is always a big deal when the company lists a cryptocurrency in its platform. Historically, cryptocurrencies tend to go parabolic because of the view that millions of customers will start trading it.
This explains why Liquity price surged on Tuesday. In a statement, Binance said that it will list Liquity in its innovation zone. However, historically, post-listing bounces rarely last long since original buyers tend to exit their trades. Also, the listing hype to die a few days later. Therefore, it is significantly risky to invest in Liquity simply because of the listing.
Read more: How to buy Ethereum.
For starters, Liquity is a blockchain company in the decentralized finance (DeFi) industry. It runs a stablecoin known as Liquity USD (LUSD), which has a market cap of over $230 million. This stablecoin makes it possible for people to borrow money against ETH. Loans in the protocol have a 0% interest rate.
Liquity does not provide the lending platform itself. Instead, it provides the technology, which other people can use to build their projects. Some of the top apps that provide its lending solutions are DeFi Saver and Instadapp among others. In all. Liquity has over $600 million in total value locked (TVL).
Still, the biggest concern about Liquity is that LUSD is not backed by fiat currencies. It is an algorithmic stablecoin like Terra USD. These stablecoins are significantly difficult to regulate since their technologies cannot be audited.
LQTY price forecast
The daily chart shows that the LQTY price went parabolic on high volume. As it rose, the coin managed to move above the key resistance level at $1.5950, the highest level since August 8. It also jumped above all moving averages while the Relative Strength Index (RSI) has moved above the overbought level.
Therefore, I suspect that Liquity will pullback sharply as sellers target the key support level at $1.5950, which is about 36% below the current level. The stop-loss of this trade will be at $2.80.
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