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Why Did the Daiquiri Price Crash - and What Will Tropical Finance Do to Avoid This in the Future
Ever since the start of the Tropical Finance DEX on SmartBCH its native token "Daiquiri" has had an astonishing price development. From a presale price of 12 Cents it was launched with a price of 20 Cents and - after a bit of an initial crash almost down to 10 Cents it went in a spectacular move to almost 32 Cents - despite Tropical Finance offering very high APRs.
However, recently the Daiquiri price dropped even quicker than it rose previously from above 20 Cents to 12 Cents. Investors want to know what happened - and how Tropical Finance wants to avoid Daiquiri price crashes in the future.
The main reason for the crash is that a few big players sold a lot of Daiquiri. That caused some more people to panic sell.
Is that something out of the ordinary?
No, unfortunately not. Dumping the price of an asset after it has given its investors great returns is a commonly used technique by big players. The panic that is created as a result among the small and medium-sized investors leads to selling pressure at low prices - which the big players can then use to buy back in much lower than the prices they sold for. In this way big players benefit from abusing the emotions of smaller investors.
My advice: Don't panic sell.
By the way: You can not only see this technique play out in crypto, you can also see it happening in stocks.
At this point it is good to remember that the Tropical Finance team does not hold any Daiquiri - other than what they have in their developer wallet. And they didn't sell anything from their developer wallet. Also the Tropical Finance moderators - who are volunteers from the community who support the core team - didn't sell any Daiquiri as far as I know.
The whales who sold acted most likely in a coordinatated way that has something to do with the next points:
Tropical Finance offered its investors not only high APRs for holding Daiquiri in farms and pools, the team ran several additional promotions. You were able to qualify for free NFTs which were given to investors who bought and held their Daiquiri. The NFTs were to be given out once the NFT marketplace is launched - where these NFTs will be stakeable with an APR of approximately 150%.
However, several investors pressed the team to hand out the rewards before that marketplace is released. Some voices even tried to cast doubt on the Tropical team claiming that they made false promises and refused to give out the rewards. The Tropical team finally gave in to the pressure in order to prove that they actually stay true to their words - and they decided to hand out the NFT rewards before the NFT marketplace is ready to be launched. Upon receiving their rewards the aforementioned whales started dumping Daiquiri and their reward NFT, too.
Having built up pressure on the Tropical team may have been a part of their strategy - or it was a lucky coincidence that impatient investors helped the aforementioned whales by chance.
Another "lucky coincidence" for the whales is that a new DEX has launched. A new DEX which promises very high APRs - with several caveats. I covered my (negative) experience with this new DEX and why these APRs are most likely exaggerated in my previous article which I won't link here. However, the interested reader should be able to easily find that article.
This is easy to answer: Some investors with a big appetite for risk and a strong desire for high APRs hop from one DEX to the next. That may have been one of the reasons why investors demanded their reward NFTs right away instead of waiting for the launch of the NFT marketplace. They planned to move their funds away from the safe, but by now not overwhelming APRs on Tropical Finance to the new unaudited DEX by a single anonymous developer which locks up 95% of the reward tokens and is hesitant to let its users know about deposit and withdrawal fees...
The Daiquiri price crashed due to a handful of big players selling a lot of Daiquiri upon receiving their reward NFTs - which were handed out prematurely to calm down investors. Smaller investors panic sold the bottom. Some investors moved on to the next new DEX. There was no fundamental reason for the crash and the investment thesis still holds.
Additionally, I would suggest to the Tropical Finance team to reduce the multipliers for some of their non-Daiquiri pools in favor of increasing the APR for the Daiquiri pool and the two Daiquiri farms. This will give investors an extra incentive to buy and hold Daiquiri - and it will keep investors from selling and moving on to another investment that may appear more profitable at first sight.
To further support the Daiquiri price and in order to reward investors, the Tropical Finance team is working on releasing a new promotional series of NFTs. These NFTs will not have any staking value on Tropical Finance, but they will most likely have a resale and collectibility value.
Every investor who buys at least 500 Daiquiri, puts it into the pool or one of the farms and holds it until the NFT marketplace is launched, will receive one basic NFT as a reward. If you buy 750, you will receive an advanced NFT. And for 1,000 you qualify for a fancy NFT. Please make sure to save the transaction ID of your purchase and take some screenshot pictures proving your purchase.