Yearn.finance’s YFI Could See a Short Squeeze to $14,000

Yearn.finance’s YFI token has continued its descent, breaking below $9,000 as sellers stay in full control of its near-term outlook and continue erasing the gains it incurred as a result of its recent parabolic rally.

This weakness has come about due to many factors, including a fragmented community, low yields on the ecosystem’s products, and the founder’s focus on new tokens he is working on.

This weakness has also come about in the face of a somewhat bullish governance proposal that redirects the ecosystem’s income away from staking rewards and towards market buying YFI tokens.

This could provide it with some buy-side pressure, but it remains unclear whether this will be enough to slow the descent it is currently facing.

One analyst is noting that a short squeeze could still occur, which may lead its price to rally up towards $14,000 in the near-term.

This potential squeeze could help the Yearn.finance token form a mid-term bottom and begin seeing some relief, but it may face further capitulation before seeing any significant gains in the near-term.

Yearn.finance’s YFI Breaks Below $9,000 as Selling Pressure Mounts

At the time of writing, Yearn.finance’s YFI is trading down nearly 8% at its current price of $8,700.

This is the lowest price at which it has been trading since it first peaked at highs of $45,000 set at the peak of the recent DeFi bull run.

Its peak coincided closely with a few major listings on exchanges, including Coinbase and Gemini.

The liquidity these listing provided gave large holders ample liquidity to exit, with its price sliding lower ever since.

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YFI Could Soon See a Massive Short Squeeze 

For Yearn.finance’s YFI to start forming a long-term bottom, it must see a short squeeze that allows it to reclaim its position above $10,000.

One analyst believes that this is a realistic possibility, noting that the massive quantity of short positions indicates that a move towards $14,000 could come about.

“YFI – No trigger no long. Not contemplating shorting this unless BTC breaks down. Might see a short squeeze to 13-14k still on the cards. Blue arrow trigger,” he said while pointing to the below chart.

Yearn.finance YFI

Image Courtesy of TraderXO. Source: YFIUSD on TradingView.

It remains unclear if Yearn.finance’s YFI has seen true capitulation yet. As such, there could be one more significant leg lower in-store before it sees a short squeeze and posts a long-term bottom.

Featured image from Unsplash.
Charts from TradingView.