Yearn Finance’s governance token YFI fell sharply on Wednesday as traders took short-term profits from its supersonic rise.
The YFI/USD rate fell 4.34% to $22,915 after hitting a 47-day high near $25,000. The pullback also came as part of a downward correction that usually follows any bullish move in an uptrend. YFI later found support near $20,000, reflecting traders’ inclination to continue the bull run.
Annual financial upgrade
Buying demand for YFI has become stronger after parent protocol Yearn Finance implemented new improvement proposals. As previously covered by NewsBTC, the YIP-54 upgrade introduces a so-called “operating fund” to “purchase back YFI or other assets at its discretion.”
.@iearnfinance buyback offer $OVER 99% approved!
Over the past four months, Yearn’s vaults have earned about $3.4 million in fees.
Some of this can now be used to perform actual buybacks (not just depletion of supply) to reward contributors. https://t.co/DbyLTRJADC
— Jason Choi (@mrjasonchoi) November 15, 2020
Traders say angel investor Jason Choi believes YIP-54 will further increase the utility of YFI, and the proposal’s intention is to allocate tokens to support hackathons, security audits, grants, bug bounties, and pay salaries to Yearn Finance contributors. praised.
“(YIP-54) is a better model than buying and burning,” said angel investor Jason Choi. “1) It introduces real purchasing demand for the tokens and ties the value of the platform to the value of the tokens, and 2) It creates skin in the game for contributors, as now a portion of the operating funds will be embedded in the native token.”
Another analyst commented:
“Instead of the old and complicated model where $500,000 or more goes to stakers, now 50% of protocol revenue goes to operations. What’s even more interesting is that Yearn-ops allows for the ability to make purchases. YFI Make it available to developers/strategists on the open market!”
A meeting of basics and powerful technology
YFI appears to be more bullish with its supporting technology set to aim to send the token back to $30,000.
Yearn Finance is pursuing a Falling Wedge breakout. Source: YFIUSD on TradingView.com
As you can see in the chart above, the YFI/USD exchange rate is outside the Falling Wedge range. A bullish reversal pattern occurs when an asset’s price trend moves lower between two converging trend lines. After reaching the peak of the structure, the price begins an upward trend, rising to the maximum distance between the two trend lines.
YFI fits almost all the criteria of a Falling Wedge pattern. This is on the verge of hitting the structure’s upside target, about $23,380 above the breakout point. It’s (almost) $30,000.
Conversely, if it fails to build bullish momentum after the recent correction, YFI/USD risks falling below $20,000 again.
At an all-time high, Yearn Finance tokens were trading at $44,000.