High open interest at negative funding rates indicates an increase in short positions.
CRV has rebounded 43% from its all-time low.
However, traders are abandoning long positions in favor of short positions.
Curve DAO [CRV] rose 43% in the past week, with high trading volume driven by surging buying.
Over the past seven days, CRV prices have steadily climbed from an all-time low of $0.18 to $0.28 at the time of writing. Despite a clear recovery in copper prices, copper prices face further headwinds as pessimism across the market weighs on prices.
Funding rate dropped sharply
Data from Cohen Glass shows that funding rates have fallen sharply into negative territory. This suggests that traders are abandoning long positions and switching to short positions.
The shift in trader sentiment suggests that CRV may have peaked and the price will face a correction or consolidation.
The sharp drop in the financing rate also indicates that CRV is cooling down after being overheated. The long/short ratio is close to 1, further indicating that the market favors neither longs nor shorts, leading to lower volatility.
However, caution is still warranted as open interest has increased from $67 million to $100 million. While this is generally seen as a positive in an uptrend, this may not be the case for CRV due to the negative funding rate.
High open interest at negative funding rates indicates an increase in short positions. This signals growing bearish sentiment.
How high can CRV go
According to Coin Market Cap data, CRV trading volume has increased by 175% in the past 24 hours.
Buyers may be behind the high volume as the relative strength index (RSI) on the four-hour chart is at 72, suggesting that CRV is slightly overbought.
However, the RSI lines are sloping towards the north, suggesting that buyers are yet to leave the market, creating room for more gains.
The price has also formed an ascending triangle which would indicate a bullish continuation if CRV touches the breakout price of $0.285 and bounces back. If the bulls are strong enough, CRV could hit the next target at the 1.618 Fib level ($0.36).
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According to analysts Trusted Crypto OnX, the token has room for further gains and the price could triple.
Conversely, the bullish argument may fail if the weak hands that bought the recent bottom sell off. This will result in a drop to the Fib level of 0.236 ($0.209).
