Near experienced a notable decline in its token price last week, hitting a seven-day low early on July 24. The token’s decreasing value led to significant long liquidations in the futures market, compelling investors on the wrong side of the trade to close their positions.
What Caused NEAR’s Decline?
At the time of writing, NEAR is trading at $5.94, having dropped nearly 5% over the past week. This decline triggered liquidations among futures investors who had anticipated a price increase. Liquidations happen when the asset’s price moves contrary to the investor’s position, resulting in a forced closure due to insufficient funds. Over the past seven days, NEAR long liquidations reached around $2.31 million, according to Coinglass data.
Why Do Investors Still Demand Long Positions?
Despite the downturn, futures market participants continued to favor long positions, as evidenced by a funding rate of 0.0047% on cryptocurrency exchanges. This trend persisted even though NEAR’s weighted sentiment has been predominantly negative since June 24, standing at -0.26 currently. A negative sentiment indicates that social media discussions are rife with fear, uncertainty, and doubt.
Key Takeaways for Investors
– Monitor NEAR’s weighted sentiment for shifts from negative to positive, which could indicate a potential price increase.
– Be cautious of long positions during a declining trend to avoid forced liquidations.
– Keep an eye on funding rates as an indicator of market sentiment and demand for long positions.
If NEAR’s sentiment shifts positively, its price could potentially rise to a monthly high of $6.49, spurring increased demand for the altcoin. However, if the current downtrend continues, the token’s price might fall to $5.17, emphasizing the importance of vigilance for investors during volatile periods.
