THORChain price dips 5% as bullish wind on illicit transfers settles

• ThorChain surpassed $1 billion in transaction volume in the last five days, a surge attributed to illicit activity.
• RUNE price has seen an impressive increase over the past week before a 5% dip on the daily chart.
• Long and Short liquidations appear to be balancing out. 

THORChain (RUNE) is exhibiting bullish price movement, but investors need to be cautious as the recent surge in trading activity could be linked to illicit transfers. THORSwap exchange said Friday that it has paused its swapping feature amid concerns it has been used to move illicit funds.  In the past week, RUNE experienced a price rally due to an uptick in trading volume, but the token price has dipped 5% in the daily frame. 

THORSwap pauses swaps 

THORSwap DEX confirmed in a tweet on Friday that it is currently being updated and cryptocurrency swaps are unavailable amid the news of illicit transfers. However, other activities on the platform like providing liquidity, earning interest, borrowing, and staking remain operational, as per the official statement on X. 
 

THORSwap entered maintenance mode on Friday after confirming that illicit funds are flowing through THORChain. It noted, “A pressing and persistent concern has recently come to light: the potential movement of illicit funds through THORChain and, specifically, THORSwap. Such activities have no place on the THORSwap platform, and THORSwap stands firmly against any and all criminal actions.”

Previously, Chinese journalist Colin Wu confirmed in a tweet that the sharp increase in transaction volume to $355 million on Thursday could be on the back of hackers exploiting this cross-chain capability. Especially since ThorChain surpassed $1 billion in cumulative transaction volume in just five days. Therefore, investors needed to exercise caution while interpreting such a spike.

THORChain's RUNE token is trading under $2 at the time of writing. Based on CoinGecko calculations, the 24-hour trading volume stands at $592 million with a circulating supply of 300 million. The last seven days saw a price increase of 1%, while the gain is nearly 9% in the last two weeks. 

While the price action seemed bullish, it was crucial to note that ThorChain is a decentralized liquidity network. It allows cross-chain token swaps, and facilitates non-custodial trading across blockchains. And bad actors can exploit this capability for transfers. 

THORChain’s Long, Short liquidations balance out

THORChain's derivatives data indicate Long and Short positions are balancing out. Based on Coinglass data, there is a 36% increase in trade volume of total derivative contracts. Open interest or contracts that are currently outstanding have risen by 8.34% to $51.49 million. The LongShort ratio in the last 24 hours is at 0.97. This metric is considered a barometer of investor expectations, and generally a high ratio indicates positive investor expectations as long positions outweigh short ones.

 

1-day RUNE price and volume chart

The position of traders show that almost equal bets are placed on RUNE price going up or down. 

Based on the fundamentals, ThorChain is currently at a block height of 12.8 million, with a total supply of 485 million RUNE tokens. The total historical volume on the blockchain amounts to $18 billion, with a total of 79,147 addresses involved.

THORChain maintains 94 active nodes at the time of writing. In terms of contribution to the Total Value Locked (TVL), the chain has $135.57 million locked as per Defillama figures.

Therefore, THORChain's recent price surge and trading volume that showcase bullish tendencies raise questions about the type of transfers. Investors need to practice caution while trading on figures with the expectation of a bullish trend. Meanwhile, amidst a surge in derivative trading activity, the Long-Short liquidations suggest that the market sentiment around price has balanced out.