Layer-1 (L1) Coin IP appears as the top gainer in today’s market, opposes the broader crypto slump to record a 4% increase in the last 24 hours.
However, despite the price surge, the warning signs are flashing beneath the surface. On-chain activity remains muted, suggesting that the rally may not be backed up by a strong foundation.
Traders bet on PI despite price increases
While most cryptocurrencies were trading low on the day, PIs have opposed their tendency to record profits. However, rallying may not last long, indicating on-chain metrics are increasingly skeptical among traders.
For example, among past 4% rallies, IP daily trading volume has fallen by 38%, indicating that fewer participants will support the upward price movement.
A rise in asset prices while trading volumes decreases suggests that fewer participants are driving price movements. This indicates a weaker purchase momentum and the lack of widespread market support behind the rise in IP prices.
These conditions make coin rally unsustainable and increase the risk of reversals and pullbacks.
Furthermore, IP funding rates remain negative, reflecting the fact that many traders in Futures Market have acquired short positions. At the time of writing, this is -0.14%.
Funding rates are periodic charges paid between traders in the perpetual futures market to line up contract prices with spot prices. If the funding rate is negative, the shorter traders are paying longer traders, indicating that the majority of the market is betting on a price drop.
In the case of IP, negative funding rates indicate that many traders expect a reversal of recent price increases. This reflects the persistent bear pressure that has kept the coin down over the past few weeks.
Can I rebound IP? If demand is returned, the token eye $3.17
At the time of writing, the IP traded at $2.75, exceeding the key support level at $1.59. When demand weakens, IP risks plummet under this floor, potentially categorized as a $1 mark.
But a revival of new demand for Altcoin could negate this bearish outlook. In that scenario, the IP price could be rebound to $3.17. A successful break that outweighs resistance could drive the price of the IP token towards the $4.41 level.
Disclaimer
In line with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. Although Beincrypto is committed to accurate and unbiased reporting, market conditions are subject to change without notice. Always carry out your research and consult with an expert before making any financial decisions. Please note that our terms and conditions, privacy policy and disclaimer have been updated.
