As the broader crypto market retraced, NEAR Protocol’s [NEAR] bullish trend collapsed, with the altcoin losing $5 support and falling to a low of $4.6.
At press time, NEAR was trading around $4.70, down 7.9% on the daily charts. Over the same timeframe, the altcoin’s Spot trading volume jumped 19% to $1.62, reflecting increased sell-side activity as traders reduced exposure.
NEAR investor sentiment flip risk-off amid liquidation risk
NEAR drop triggered a long squeeze. Investors who had taken leveraged long bets were flushed out of the market.
According to CoinGlass data, the altcoin saw over $20 million worth of longs liquidated. Usually, such a high liquidation rate leads to further downside.
At the same time, it creates fear among speculators, with some panicking and exiting their positions. Such a market behavior was evidenced over the last 24 hours.
At the time of writing, the altcoin’s Open Interest (OI) dropped 12.3% to $1.4 billion while the derivatives volume surged 12% to $2.97 billion.
When OI drops and volume rises, it reflects increased activity as traders reduce exposure, with risk-off sentiment dominating the market.
Often, such a market approach results in short-term price drops but also helps in reducing market volatility.
Dip buyers offer a lifeline
However, the Spot market participants seem to have taken the opportunity to buy the dip. While derivatives panicked, those on the spot started to accumulate at a discount.
A look at spot activity confirms this view. The altcoin’s Spot Netflow dropped to -$28 million on the 28th of September, its lowest since June.
A negative Netflow implies that the asset saw more outflows relative to deposits. Historically, higher outflows when sustained have absorbed pressure arising elsewhere and helped in trend reversal.
Can NEAR crypto recover from the recent slip?
From a structural standpoint, NEAR is experiencing strong short-term downside pressure. In fact, the altcoin’s Relative Strength Index (RSI) formed a bearish crossover and fell to 68.
The bearish move implied weakening buyers’ strength with sellers gaining momentum. However, since it still holds deep within the bullish zones, it shows sellers have yet to retake the market and buyers are still enjoying significant influence.
Under these circumstances, NEAR could see some short-term weaknesses and losses. If derivatives continue to exit, the altcoin could drop to $4.4.
However, the buying activity on the spot market gives hope, and if these buyers manage to absorb the pressure, NEAR will bounce back and reclaim $5 and move above $5.5.
Final summary
- NEAR trend reversed, falling to hold $5 support and declining 7.9% to a low of $4.60 before slightly rising to $4.70.
- Price drop triggered a long squeeze, with over $20 million worth of longs liquidated, prompting traders to panic and exit.
