RIVER recorded gains of 11% over the past day as capital inflows rose, driven specifically by activity across the perpetual market.
A notable aspect of this recent surge, however, was that it carried significant risk of a bull trap. Especially since the underlying conditions behind the rally did not form in an entirely bullish scenario.
Perpetual inflows drive RIVER higher
The surge in River [RIVER] marks a notable turnaround for investors who have largely been offloading the asset.
This week has been dominated by significant sell pressure, with $1.94 million in net selling recorded – Meaning sell volume outweighed buy volume across the spot market.
The reversal that has since pushed RIVER higher came from capital inflows in the perpetual segment of the market. This indicated that buying activity from this cohort supported the press time price move.
Open interest rose by 3% over the past day, hitting approximately $76 million at the time of writing.
The funding rate turned positive too, implying that the fresh capital entering the market has been concentrated on the long side of contracts.
And yet, despite everything, risk appeared to be elevated in the market. Especially since data pointed to a high tendency for a drawdown from this phase.
Binance long-to-short ratio hits 2.24
Volume data across the perpetual market revealed a split between Binance traders and the broader market.
Binance traders have continued to trade more buy volume in the RIVER perpetual market, with the long-to-short ratio on the platform reaching 2.26 at the time of writing. This, against a total RIVER perpetual volume of $50.70 million.
A long-to-short ratio above 1 signals that buy volume is dominant, and the further the reading sits above 1, the stronger the buying concentration in the market.
The broader perpetual market for RIVER told a different story, however, with the overall long-to-short ratio dropping below 1 to a reading of 0.97. This indicated that sell volume has been dominant across other exchanges.
This split between Binance and the rest of the market seemed to add to the risk profile of the ongoing rally.
Bull and Bear Power shows minimal buying pressure
Finally, market analysis warned that momentum has not yet peaked in favor of the bulls, with bears holding a higher probability of taking control.
The Bull and Bear Power indicator tracks whether buyers or sellers are driving the market through histogram bar formations. At press time, buyers seemed to be showing clear signs of limited commitment.
The chart revealed only a very small green bar forming, suggesting that buying power in the market has been minimal and that the probability of a sustained upswing might be low.
The Relative Strength Index reinforced this reading too, remaining in negative territory while continuing to trend south.
A declining RSI usually alludes to the build-up of selling pressure, placing RIVER at significant risk of a reversal from its elevated levels.
Final Summary
- RIVER’s latest surge came as a surprise to those who have been offloading the asset.
- Perpetual inflows have been critical to RIVER’s recent performances.
