This is why the new crypto aptos (APT) suddenly rose by 30%

The price of aptos (APT) has jumped quite a bit in the last 24 hours. The project, which launched on October 17, at one point rose over 30%. However, the underlying cause is not a sudden change in sentiment about the project.

Aptos shows recovery after bad week

Aptos is a smart contract network launched this week. It should compete with networks like Ethereum (ETH) and Solana (SOL). The project was founded by former employees of Facebook’s Meta project. After four years of development, it became mainnet unveiled on October 17.

Soon after its launch, APT slumped. This was partly due to the problematic start where transactions were not processed as quickly as promised. In addition, the tokenomics behind the project are vague and many venture capitalists invested in the project, including FTX CEO Sam Bankman-Fried.

Many traders responded to this by short to go on APT. Bee short selling a crypto position is opened by borrowing the crypto with the expectation that its value will fall. The investor then sells this borrowed crypto to buyers who are willing to pay the market price. Before the borrowed crypto has to be repaid, the trader bets that the price will fall further and he can buy them at a lower cost.

Crypto price rises 30% after short squeeze

However, when many traders go short, it can be a short squeeze cause. This is a kind of chain reaction caused by short sellers who have to buy back their position due to the rising price. This causes the price to rise faster, forcing even more short sellers to close their positions. Basically, this sets off a chain reaction that causes the price to rise rapidly.

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This was also the case at APT. A short squeeze lifted APT from a price of $7.44 to a high of $10.12, according to dates from CoinGecko. Because of the negative funding rate became clear that a short squeeze was the likely rode before the rise. At the time of writing, APT has fallen slightly in value again.

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