Although Aptos faced some serious problems soon after it was listed on Binance, it has risen more than 37% in the last 24 hours, making it the biggest gaining coin in the market. The altcoin tested the intraday low of $ 7.47, while the highest it reached was 10.25. There are some reasons behind this success of APT. Details are here.
Negative funding rates
Koinfinans.com As we reported, the funding rate is essentially an indicator that traders use to assess market sentiment. Futures exchanges use a system called “funding” to maintain balance in the market.
According to the system in question, when buyers (i.e. long positions) are dominant in the market, the funding rate increases, and when the opposite is true, there is a decrease. When the value of this metric is positive, longs pay a premium to shorts to hold their positions. However, technically, they pay the bulls after the funding rates are negative.
The negative turn of the funding rate, that is, more short positions, can be considered as a signal that there may be a change in the trend. Because in such a situation short-squeeze (short position compression) may occur.
When mass liquidations occur in short positions due to a sudden sharp fluctuation in price “short-squeeze” occurs. Large liquidations move the altcoin price further in the direction of the reversal, causing the market to clear leverage. In this way, the purges follow each other, and the “squeezeIt’s called ‘.
According to Coinglass data, Aptos token APT perpetual contract funding rate is negative, Binance -0.6683%, OKX -0.2797%, Bybit -0.7500%, FTX -0.3976%, or because the recent Aptos ecosystem has attracted a large number of participants for hedging . pic.twitter.com/9K9Q5vZgJd
— Wu Blockchain (@WuBlockchain) October 23, 2022
Short positions on the APT futures market accumulateIt seems likely that a surge in price will cause such compression and bring some bullishness for crypto. So we can consider this as a reason for the rise.
However, the main reason funding rates turned negative was the selling pressure after the team behind Aptos showed they didn’t understand some blockchain mechanisms like the Sybil attack.
After the release of a sudden airdrop, APT faced a huge increase in selling pressure, resulting in a drop from $15 to $7.
Venture capital support for altcoin
It is a well-known fact that Aptos received massive support from institutional investors before being listed on major exchanges.
However, some investors are worried that a large percentage of institutional investors will see a spike in selling pressure as soon as APT starts to recover.
Market recovery
Despite the 50% drop, Aptos remains one of the largest digital assets in the market and a potential market recovery will bring some support for the altcoin.
At press time, Aptos is trading at $10 and is up 32% in the last 24 hours.
You can check the price movements here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, KoinFinans and the author of this content cannot be held responsible for personal investment decisions.