Pyth Network [PYTH] has recorded a massive decline over the past day, with the asset plummeting roughly 12% to a new local low at press time.
The reaction, expectedly, followed the Binance hack incident, which reportedly resulted in losses of roughly $6.3 billion. However, a closer look shows that the protocol has also recorded one of its weakest-performing months.
Perpetual market activity has further fueled the decline, as traders concentrate capital on shorting PYTH.
PYTH records a $179M capital outflow
The decline in PYTH was accompanied by a massive on-chain capital outflow, tracked through Total Value Secured (TVS).
TVS tracks the total value of assets managed by the protocol, including bridged and native tokens. The decline suggests that market participants are pulling back from active utility. Over the past day, TVS dropped from $3.164 billion to $2.985 billion, marking an outflow of $179 million in the past 24 hours as of writing .
More concerning is that Pyth Network’s earnings have also plummeted significantly over the past day, according to data from DeFiLlama. Earnings, which track gross profit after incentives, have fallen to roughly $1,310 at press time, the lowest level ever recorded on a monthly basis.
In fact, this represents a significant decline from September, when the protocol earned $434,640. When earnings drop to this level, it points to reduced protocol utility as users become more reluctant to engage with the platform.
Perpetual traders increase short positions
Sellers have dominated perpetual trading activity as they continue to expand their positions.
Funding Rate data for PYTH‘s perpetual market shows a significant concentration of short positions, with the rate falling to -0.0172 as of writing.
PYTH’s negative Funding Rate, now at an extreme level, shows that traders have positioned roughly $36.77 million in the perpetual market towards shorting the asset.
When broken down by trader category, the data shows that whales, traders who control large amounts of capital in the market, have been key participants influencing price dynamics.
The Whale-Retail Delta, which tracks the difference between whale and retail trading activity, rose to 0.301 over the past day as whale positioning in the asset continued to increase.
Spot traders accumulate despite the decline
Spot traders, despite the negative outlook, have been accumulating the asset.
According to CoinGlass, Spot Netflow tracks the inflow and outflow of capital on exchanges. When outflows exceed inflows, it suggests that more assets are being withdrawn from exchanges, potentially indicating accumulation.
Netflow currently stands at -$1.56 million, suggesting that following the decline, more capital has moved out of exchanges than into them. This outlook may stem from investors viewing the recent drop as a discount.
Final Summary
- PYTH dropped roughly 12% as Total Value Secured (TVS) declined by $179 million to $2.985 billion, while protocol earnings fell to $1,310.
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Negative Funding Rates and rising whale positioning point to sustained selling pressure, although Spot Netflow shows $1.56 million in exchange outflows.
