CoinWire reports:
Activity in the spot market contrasts with bearish expectations in the derivatives market. Increasing open interest could support further price increases.
Following a recent price crash a few days ago, altcoins including Avalanche (AVAX) have managed to hold onto their recent gains. However, AMBCrypto found that traders in the market are betting in the opposite direction.
As of the time of writing, the long/short ratio for AVAX stands at 0.88, serving as an indicator of market sentiment. The ratio is a barometer of investor expectations.
To derive this figure, the number of long positions must be divided by the number of short positions.
Doubts about the uptrend
Contextually, long refers to traders predicting price increases while hoping to profit from them. Short refers to traders betting on price declines.
When the long/short ratio exceeds 1, it indicates that on average, market participants expect prices to rise.
However, if the ratio falls below the threshold, it suggests broader expectations of price declines, which is the case with the token.
At the time of writing, AVAX traded at $27.44. This figure represents a 9.09% increase in the past 24 hours from its previous low of $22.25. Thus, the data above suggests traders anticipate the value to tilt towards this range again.
However, according to Cumulative Volume Delta (CVD) data, this may not materialize. CVD measures the amount of cryptocurrency based on buy and sell orders in the market.
AVAX targeting $30
A positive CVD implies higher buying volume than selling volume in the spot market. Conversely, a negative value suggests aggressive selling in the market.
Based on AMBCrypto’s analysis, AVAX shows a positive CVD on the daily chart, indicating increased buying pressure.
If sustained, AVAX’s price could rise to $30, potentially leaving traders shorting cryptocurrencies unrewarded.
In addition to these metrics, AMBCrypto also focuses on Open Interest (OI). Evaluating OI aims to examine whether AVAX truly counters the intentions of derivatives market traders.
At the time of writing, OI has increased by $267.12 million, nearing the $300 million market. Open interest refers to the total sum of all outstanding contracts in the market.
An increase signifies capital entering the market, with net positions also increasing. Conversely, a decrease indicates a reduction in net positions as traders withdraw liquidity.
For AVAX’s price, this uptick serves as a positive indicator for further increases. But only time will tell if this trend persists.
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With capital flowing into the derivatives market and buying pressure in the spot market, cryptocurrency prices could continue to rise.
If so, the token could reach $30 within days. This scenario implies no rewards for bears.