What you need to know
Why did Plasma defy the typical bearish trends
The open interest surged up to 255 million dollars, despite a price decline of 15%. This shows renewed trading participation.
What is driving XPL’s recovery?
The bullish trend can be strengthened by a Long/Short ratio above 2,0 and the liquidation of short positions.
Plasma [XPL] dropped nearly 15% in the past 24 hours, extending its October slide.
Data from the on-chain revealed that traders were exhibiting unusual behaviors. This could be a sign of a possible early rebound, if bulls continue their momentum.
Open Interest Surges Despite Explosive Bearish Drop
Open Interest for Plasma (OI) has risen to 255.08 millions, from the lows around 233 million. OI typically contracts as prices drop and traders sell their positions.
It is possible that institutional traders are buying dips to open new positions.
Coinalyze
However, despite the recent bearish spot price action, new capital entering the derivatives markets could indicate that speculative sentiment is returning.
Short liquidation sends mixed signals
At the time of publication, Plasma’s aggregated short liquidations reached $1.33m versus only $49,000 for longs. As volatility increased, the imbalance resulted from a growing pressure on shorts.
This setup can swing in either direction: A deeper correction, if the momentum goes away; or an explosive bounce if sellers of shorts retreat.
Coinalyze
Plasma buyer’s dominance compliments the surging interest of institutional buyers
Plasma’s long/short ratio (AVG), at the time this article was written, stood at 2,027. This means that shorts were outnumbered by roughly 2 to 1. This dominance is often a sign of increasing confidence by traders in the price recovery.
However, the future of this optimism will be determined by whether or not demand continues to grow on both Spot as well as Futures markets.
Combining short liquidations with higher exposure to long-term investments gives bulls an edge in the near term, but continued accumulation is required to confirm a trend change.
Coinalyze
What is next for XPL?
Summary: The current price setup for XPL is mixed, but could be optimistic.
The recent steep decline almost brought the token to its knees, but the rising interest in the market and the strong dominance of buyers suggest a growing confidence.
If the momentum for bulls continues, XPL might be on its way to a major reversal.
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Source: ambcrypto.com
