What Happened to Alpaca Finance? Looking at the Recent 100% Price Surge and Drop of ALPACA

Alpaca Finance's native token ALPACA caught market attention after doubling in value before falling back within hours. 

This volatile movement came shortly after the platform completed its 215th weekly token buyback and burn. 

With over 8,800 ALPACA tokens burned and deflationary weeks making up most of the past two years, this sudden pump-and-dump pattern raises questions about sustainability, market reactions, and future outlook. So, was this a true breakout or a short-term overreaction?

Breaking Down the Token Burn and Market Reaction

Alpaca Finance announced the completion of its 215th weekly buyback and burn, sending 8,888 ALPACA tokens (worth around $1,800) to an inaccessible address. The protocol has now burned a total of over 34.99 million tokens, representing 18.61% of the total supply. 

This level of consistent deflation is unusual even among DeFi projects, and likely contributed to the sharp interest in the token over the past 24 hours.

The team also shared that 133 of the last 139 weeks were deflationary, showcasing a persistent supply-tightening model. 

In total, over $4.38 million in revenue has been distributed to users through the protocol. These fundamentals, especially when publicised in a tweet just before the price spike, appear to have reignited attention toward ALPACA.

On the surface, a deflationary token combined with ongoing user incentives and buybacks can strengthen a token’s economic model. 

Reducing circulating supply while offering user rewards appeals to both long-term holders and short-term traders. However, the timing of the tweet, combined with the dramatic surge and fall in price, suggests speculative momentum played a significant role.

The price moved from roughly $0.28 to $0.69 in a few hours, before pulling back sharply to the $0.27 range. 

This type of movement is typically unsustainable without broader support, such as steady volume, higher time-frame breakouts, or continued positive catalysts. While the burn mechanism is ongoing, it alone was not enough to hold the price above the temporary high.

Read more: What is Alpaca Finance? Explanation and How to Use

Interpreting ALPACA’s Intra-Day Volatility

The trading data reveals just how volatile ALPACA became during this window. Within 24 hours, the trading volume spiked to over $269 million, a figure that dwarfs its usual activity. For a token with a market cap around $42 million, this surge in volume is substantial, indicating a large number of market participants engaged in the rally.

What this suggests is that the price action was heavily driven by speculative interest, likely encouraged by the token burn announcement and short-term sentiment. 

As often happens with low-to-mid cap tokens, this kind of enthusiasm can snowball rapidly as traders pile in, hoping for a quick gain.

However, when the buy pressure fades or initial buyers start taking profit, the lack of sustained demand can trigger an equally sharp decline. 

This is what appears to have happened with ALPACA. After hitting a local high of $0.6975, the price fell back to below $0.28 by late afternoon. The rapid sell-off reflects a combination of profit-taking, market correction, and possible exhaustion of short-term interest.

It’s also worth noting that ALPACA’s total supply is capped at 188 million, with roughly 151.7 million in circulation. With nearly 19% of that already burned, scarcity is increasing gradually, but not so fast as to permanently constrain availability in the market. 

This makes short-lived spikes like today possible, but not necessarily sustainable unless demand rises in tandem.

The behaviour today also shows that token burns, even when routine, can spark sudden attention, especially if announced in a way that implies new momentum. 

But without accompanying changes in fundamentals, like protocol usage growth or significant integrations, such movements often reverse just as quickly.

Read more: Alpaca Finance (ALPACA) Price Prediction 2025

Looking Ahead: Is There Still a Bullish Case?

The dramatic swing in ALPACA’s price does not automatically cancel its longer-term potential. Instead, it highlights the importance of timing, sentiment, and how retail investors interpret supply-side events like token burns. 

If viewed positively, the deflationary structure can support future price appreciation, provided there is real growth in user activity and value locked on the platform.

Alpaca Finance currently has over $53 million in total value locked (TVL), which places it among active DeFi protocols on BNB Chain. Its core model, providing leveraged yield farming, remains unchanged. 

The team continues regular buybacks, distributes revenue to users, and commits to transparent updates.

However, a more sustainable upward trend would likely require a combination of consistent TVL growth, increased trading volume over time, and external integrations that bring in new users. 

Without those, ALPACA may remain vulnerable to sudden bursts of speculative activity followed by quick reversals, as seen today.

Traders should treat these events carefully. The price appreciation driven by burn-related narratives can offer short-term opportunities, but managing risk is crucial. On days like today, those who entered late may be left with losses once the price corrects. 

Similarly, investors interested in the project’s fundamentals may prefer to look for entries once volatility settles and a more stable price pattern emerges.

For long-term holders, the deflationary policy and revenue distribution model remain appealing, especially if the platform’s ecosystem continues to attract liquidity. 

However, today’s event also underscores the reality that token economics alone cannot drive lasting market trends without real user activity to support them.

Conclusion

ALPACA’s price doubled within hours, then returned to nearly its starting point just as fast. The trigger was clear: a publicised token burn and confirmation of long-standing deflationary supply. 

While the fundamentals of Alpaca Finance remain solid with regular buybacks and consistent revenue sharing, the token’s dramatic 24-hour price movement points to the effects of speculative momentum over long-term valuation. 

Investors should weigh both the strength of tokenomics and the stability of community growth when evaluating future price prospects.

For those seeking a more secure and intuitive platform to explore tokens like ALPACA, Bitrue offers a reliable gateway. Whether you are an active trader or a long-term investor, Bitrue’s tools can support your strategy with ease and safety.

Frequently Asked Questions

1. Why did ALPACA’s price rise and fall so quickly today?

The price rose due to attention around its weekly token burn, then fell as traders took profits and speculative interest cooled.

2. Is ALPACA still a deflationary token?

Yes, over 18% of the total supply has been burned, and Alpaca Finance continues weekly buyback and burn programs.

3. Should I buy ALPACA now after the drop?

That depends on your risk tolerance and strategy. The project remains active, but today’s movement suggests caution due to high volatility.

Investor Caution 

While the crypto hype has been exciting, remember that the crypto space can be volatile. Always conduct your research, assess your risk tolerance, and consider the long-term potential of any investment.

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