The Dego Finance token crashed by over 40% on Wednesday, wiping out all gains from the past few months and reviving memories of the recent Mantra collapse.

Dego Finance (DEGO) plunged more than 40% on Wednesday, wiping out all gains from the past few months and reviving memories of the recent Mantra (OM) collapse.

The sell-off triggered a wave of liquidations. According to CoinGlass, long positions worth more than $650,000 were liquidated, the highest on record for the token. The crash came after over $250,000 worth of DEGO tokens moved to exchanges, ending a ten-day streak of net outflows.

DEGO’s crash mirrored the recent Mantra (OM) plunge, in which the token fell by over 90% within a day. The two are similar because there was no major news triggering the plunge. In Mantra’s case, the developers blamed forced liquidations from an unnamed exchange.

The token plunged on the same day that the developers started purchasing USD1, the stablecoin project by Donald Trump’s World Liberty Financial on the BNB Chain. Some commenters on its social media post warned that the announcement was part of a rug pull scam.

DEGO price technical analysis

The daily chart shows that the DEGO token price peaked at $2.8600 last week as most altcoins rallied. Its highest point last week was 122% above its lowest point this year. 

All these gains were undone on Wednesday when it nosedived and retested the year-to-date low. It moved below the 50-day and 100-day moving averages, and the lower side of the ascending channel shown in blue. 

The Relative Strength Index and the MACD have all pointed downwards. Therefore, the most likely scenario is where the Dego Finance price continues falling as holders dump it. If this happens, it may keep falling to below $1.

Another scenario is where the price stages a relief rally known as a dead cat bounce. This is a situation where an asset in a freefall bounces back temporarily and then resumes the downtrend.

Mantra had a similar price action. After plunging to $0.3834 on April 13, it rebounded by 157% the following day, and then resumed the downtrend. It now trades 18% below the initial plunge.