Core Viewpoint - The Alpaca Finance ($ALPACA) perpetual contract incident exemplifies the "short squeeze" phenomenon, revealing the true nature of perpetual contracts under extreme market pressure [1][2][26]. Group 1: Market Reaction and Mechanism - Traditional market logic suggests that delisting from an exchange is a strong bearish signal, leading to price declines due to reduced liquidity. However, in the Alpaca case, a significant negative catalyst resulted in an explosive price surge of thousands of percentage points, driven by the unique mechanisms of its perpetual contract market [2][6]. - The "perpetual contract paradox" indicates that a negative catalyst can trigger an extreme positive price reaction, with the perpetual contract itself serving as both the stage and the weapon for this financial game [2][3]. Group 2: Timeline of Events - On April 24, 2025, Binance announced the delisting of ALPACA, leading to initial panic and a price drop to approximately $0.029. This set the stage for a short-selling frenzy [5]. - Following the announcement, the short open interest (OI) for ALPACA perpetual contracts surged, creating a crowded short position that became a perfect "short trap" [7]. - By April 30, 2025, ALPACA's price peaked at approximately $1.47, marking a dramatic increase of over 2,160% from its low of around $0.065 [15][17]. Group 3: Psychological and Structural Factors - The delisting announcement created a "zero-sum" consensus among traders, leading to a widespread belief that the asset's value would plummet to zero, which in turn fueled aggressive short-selling [6][10]. - The market's structure, characterized by low liquidity and a small market cap of about $5 million, allowed manipulators to create significant price volatility with relatively little capital [9][24]. Group 4: Funding Rate Mechanism - The funding rate mechanism of perpetual contracts became a tool for punishing short positions. Binance's adjustment of the funding rate settlement frequency to hourly and increasing the rate cap to ±4% significantly impacted short traders, leading to unsustainable holding costs [12][13][20]. - As the funding rate turned negative, short traders faced exorbitant costs, compelling them to close their positions, which further fueled the price increase [13][20]. Group 5: Conclusion and Market Implications - The Alpaca incident serves as a cautionary tale about the vulnerabilities of low liquidity assets in the perpetual contract market, where structural imbalances can lead to outcomes contrary to fundamental value [22][24]. - The event has sparked a new speculative narrative around "delisting coins," where traders seek to replicate the short squeeze phenomenon seen with ALPACA by targeting low market cap assets [23][26].

Core Viewpoint - The cryptocurrency "vault company" trend may have peaked, and the next major trend will be the migration of traditional assets to blockchain through Real-World Assets (RWA) [1][4] Group 1: Cryptocurrency Vault Companies - Michael Novogratz, CEO of Galaxy Digital, suggests that the peak of "vault companies" holding cryptocurrencies on their balance sheets has likely been reached [1] - Companies like MicroStrategy have pioneered this model, and new entrants are now diversifying into Ethereum and other lesser-known tokens [2] - Galaxy Digital has partnered with over 20 crypto vault investment firms, generating approximately $2 billion in assets for its custody platform, creating a recurring revenue stream [2] Group 2: Financial Performance of Galaxy Digital - Galaxy Digital reported a net profit of approximately $30.7 million for Q2 2025, a significant recovery from a loss of $177 million in the same period last year [3] - The company's diluted earnings per share for the quarter was $0.08, slightly below analyst expectations, leading to a 4% drop in stock price [3] Group 3: RWA and Tokenization Trends - Novogratz believes that crypto vault companies and cryptocurrency ETFs provide important exposure for hedge funds wary of directly holding tokens [4] - Major financial institutions like Goldman Sachs and JPMorgan are increasingly focusing on RWA as a new business trend [4] - The concept of tokenization involves mapping traditional financial assets onto the blockchain, which could lead to a market size exceeding $18 trillion by 2033, with a projected CAGR of 53% since 2025 [5][6] Group 4: Advantages of RWA for Traditional Banks - RWA offers a more straightforward regulatory framework compared to pure crypto assets, making it easier for traditional banks to adopt [7] - The underlying assets like bonds and loans provide stable cash flows, aligning well with traditional banking business models [7]