The all-time high lasted just one day: $SKY gained nearly 80% in less than three weeks, but half those gains have already disappeared
On October 5, SKY touched $0.102, its highest price since launch. Two days later, it had fallen back to $0.08, giving back half of the gains since its rally began at $0.057 on September 16.
On October 7, BTC fell 2.6%, while SKY dropped 10%.
In my previous article, I said to watch two things: whether Sky’s buybacks were still ongoing, and whether major holder SDEV was selling its tokens. The answer to both was “nothing has changed.” So why did the price still fall?
The answer is hidden in one number.
🔍 The buybacks haven’t changed at all
SKY is the governance token of Sky (formerly MakerDAO). Every day, Sky uses its earnings to buy SKY on the market.
On September 14, the daily buyback was $108,900, and SKY was at $0.063;
On October 5, the daily buyback was still $108,900, and SKY had reached $0.102.
The same buying pressure, but the price was up 60% (see the bottom row of bars in the chart). The extra gains didn’t come from buybacks. So who drove them?
1️⃣ An “imaginary big buyer”
SDEV is a U.S.-listed company that holds about 10% of SKY. Its strategy is like “MicroStrategy for SKY”: the higher its stock price, the more advantageous it is to issue shares, raise money, and buy tokens. It also has $83.2 million in authorized share issuance, equivalent to 760 days of Sky’s buybacks.
Starting September 18, SDEV and SKY began rising on the same day. In three weeks, SDEV surged from $0.84 to $9.80. The market was betting that it would come in and buy.
But disclosures show that from July to October 2, its increase in token holdings was almost entirely accounted for by staking rewards. There’s no sign it made major purchases on the market.
On October 5, a negative report came out, and SDEV was cut in half that day. The imaginary buyer was gone—and had instead become a potential seller: it had only $7.2 million in cash on its books, and its filings state that it may sell some of its SKY at any time.
2️⃣ People borrowing to bet on a price rise are the quickest to flee when prices fall
Over these three weeks, open interest in SKY futures on Binance doubled from about $13 million to $26 million. At one point, large traders’ bullish bets outnumbered their bearish bets by 4 to 1.
When the price turns, these traders—whether they cut their losses or get liquidated—turn into sell orders. Around October 7, futures open interest fell 7%, and the large-trader long/short ratio dropped from 2.8 to 1.8. That’s the longs exiting.
3️⃣ BTC delivered the final blow
On October 7, oil prices surged to $102, and the market worried that the Fed might raise interest rates. BTC fell below $83,000. When the broader market turns, the tokens that have risen the most and have the biggest unrealized gains are the first to be sold. SKY’s drop was about four times BTC’s.
Putting it all together: the imaginary buyer disappeared → leveraged longs started fleeing → BTC fell and delivered the final blow.
📅 What to watch next
· SDEV’s next disclosure of its 2.32 billion tokens: if its holdings are down, the potential seller has become a real one. On October 16, some of its investors will be able to start reselling their shares, so pressure on the stock price may come first.
· Futures open interest: only when it returns to around $13 million can we say the leveraged traders have cleared out.
· Buybacks: as long as the daily $108,900 buyback continues, the business is still there.
My take: the buybacks prove that Sky’s business is real, but they don’t prove that $0.10 is a fair price. $SKY , the first thing to watch is whether the leverage has been flushed out, then whether $BTC can hold steady.
Did you buy SKY for the buybacks, or did you get in amid the excitement around SDEV?
On October 5, SKY touched $0.102, its highest price since launch. Two days later, it had fallen back to $0.08, giving back half of the gains since its rally began at $0.057 on September 16.
On October 7, BTC fell 2.6%, while SKY dropped 10%.
In my previous article, I said to watch two things: whether Sky’s buybacks were still ongoing, and whether major holder SDEV was selling its tokens. The answer to both was “nothing has changed.” So why did the price still fall?
The answer is hidden in one number.
🔍 The buybacks haven’t changed at all
SKY is the governance token of Sky (formerly MakerDAO). Every day, Sky uses its earnings to buy SKY on the market.
On September 14, the daily buyback was $108,900, and SKY was at $0.063;
On October 5, the daily buyback was still $108,900, and SKY had reached $0.102.
The same buying pressure, but the price was up 60% (see the bottom row of bars in the chart). The extra gains didn’t come from buybacks. So who drove them?
1️⃣ An “imaginary big buyer”
SDEV is a U.S.-listed company that holds about 10% of SKY. Its strategy is like “MicroStrategy for SKY”: the higher its stock price, the more advantageous it is to issue shares, raise money, and buy tokens. It also has $83.2 million in authorized share issuance, equivalent to 760 days of Sky’s buybacks.
Starting September 18, SDEV and SKY began rising on the same day. In three weeks, SDEV surged from $0.84 to $9.80. The market was betting that it would come in and buy.
But disclosures show that from July to October 2, its increase in token holdings was almost entirely accounted for by staking rewards. There’s no sign it made major purchases on the market.
On October 5, a negative report came out, and SDEV was cut in half that day. The imaginary buyer was gone—and had instead become a potential seller: it had only $7.2 million in cash on its books, and its filings state that it may sell some of its SKY at any time.
2️⃣ People borrowing to bet on a price rise are the quickest to flee when prices fall
Over these three weeks, open interest in SKY futures on Binance doubled from about $13 million to $26 million. At one point, large traders’ bullish bets outnumbered their bearish bets by 4 to 1.
When the price turns, these traders—whether they cut their losses or get liquidated—turn into sell orders. Around October 7, futures open interest fell 7%, and the large-trader long/short ratio dropped from 2.8 to 1.8. That’s the longs exiting.
3️⃣ BTC delivered the final blow
On October 7, oil prices surged to $102, and the market worried that the Fed might raise interest rates. BTC fell below $83,000. When the broader market turns, the tokens that have risen the most and have the biggest unrealized gains are the first to be sold. SKY’s drop was about four times BTC’s.
Putting it all together: the imaginary buyer disappeared → leveraged longs started fleeing → BTC fell and delivered the final blow.
📅 What to watch next
· SDEV’s next disclosure of its 2.32 billion tokens: if its holdings are down, the potential seller has become a real one. On October 16, some of its investors will be able to start reselling their shares, so pressure on the stock price may come first.
· Futures open interest: only when it returns to around $13 million can we say the leveraged traders have cleared out.
· Buybacks: as long as the daily $108,900 buyback continues, the business is still there.
My take: the buybacks prove that Sky’s business is real, but they don’t prove that $0.10 is a fair price. $SKY , the first thing to watch is whether the leverage has been flushed out, then whether $BTC can hold steady.
Did you buy SKY for the buybacks, or did you get in amid the excitement around SDEV?