PYTH Network: Analyzing the Decline in Derivatives Market
In many ways, it has reached an all-time low.
The PYTH token, the base token of the oracle service provider PYTH Network, has been facing a significant decline in its derivatives market. The total open interest has fallen to an all-time low, with the token price recently closing at $0.22 during a general market downturn.
According to Santiment data, the outstanding interest in PYTH peaked at $113 million on March 17 but has since been fluctuating with lower lows and lower highs. The recent broad decline in the cryptocurrency markets led to a sharp drop in open interest to a record low of $19 million.
PYTH Derivatives Market: Liquidations and Declining Interest
Open Interest is a key metric in the derivatives market, representing the total number of open contracts that have not yet been settled. The recent double-digit price declines have resulted in numerous long positions being liquidated, with over $1.8 million in PYTH purchases and liquidations in the past week alone.
As market sentiment turned negative in early August, traders rushed to increase their short positions, signaling a bearish bias for the token. This shift in sentiment indicates more traders are anticipating a price drop in PYTH rather than holding altcoins for potential higher prices.
Forecasting PYTH Price Movement: Potential Scenarios
Looking at the technical indicators, PYTH’s relative strength index (RSI) is currently at 40.35 on the daily chart, below the neutral line of 50. This indicates that selling pressure is dominating over buying activity, contributing to the downward trend in price.
Furthermore, the Chaikin Fund Flow (CMF), tracking the flow of altcoin funds in the market, is below the zero line at -0.01, showing market weakness and potential for continued price declines.
If demand remains weak and capital outflows continue, there is a possibility for PYTH to revisit its all-time low of $0.22. However, a strengthening bullish sentiment could push the token price back up towards its 30-day high of $0.44.
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