The latest crypto market sell-off managed to put a lot of pressure on DeFi platforms. Bancor, like many other platforms like it, is also feeling the heat. Bancor recently announced a temporary hiatus for temporary loss protection. The announcement is part of the plan to reduce the massive outflow of liquidity pools.
Bancor made the announcement via a market conditions update released on June 20. The DeFi protocol cited hostile market conditions as the reason for disabling temporary protections. However, it noted that the feature would be reactivated when market conditions improve. The move comes amid concerns that DeFi platforms are under attack.
Bancor’s attempt to put out a fire?
Bancor’s latest update assured its users that the protocol is secure and not subject to attacks. However, it did emphasize the need to take such measures to alleviate the pressures facing the DeFi platform.
“The temporary measure to pause IL protection should give the protocol some room to breathe and recover,” the update said.
Bancor also followed up the update with a AMA to clarify the matter. Mark Richardson, research leader at Bancor, noted that the temporary protection pause would discourage potential economic attacks.
This was a reference to the potential of a bank run, which was triggered when major players such as 3AC and Celsius started withdrawing their funds.
What consequences does the decision have for BNT?
BNT has been in a downward spiral since June 10. This date saw it drop from $1.32 to $0.43 on June 18. The sell-off resulted in nine consecutive daily red candles, highlighting panic over the likelihood of a liquidity run.
BNT is now heavily oversold due to the panic selling that has followed in recent days. It painted its first green candle during the June 19 trading session after testing the November 2020 lows.
BNT’s on-chain statistics brought up interesting observations about its performance. For example, the 30-day MVRV ratio fell from -5.3% on June 9 to -40.35% on June 18.
However, it is worth pointing out that it quickly rose to the press time level of -29.16%. It meant a lot was bought on the most recent bottom.
Supply at top addresses fell sharply from 76.90% on June 13 to 72.47% on June 18. However, it recorded a slight improvement over the past two days, confirming that some whales have been re-gathering at recent lows.
It remains unclear whether Bancor’s decision has halted the sale. However, the statistics suggest that investors, especially whales, saw it as a sign to ease the selling pressure.
This post Bancor presses the pause button, but does that really work for BNT
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