ASTER rallied heavily on the 21st of August, largely driven by market optimism over regulation around decentralized perpetuals exchanges. This was after Trump announced that the CFTC was working to bring Hyperliquid into the U.S. markets.
However, market conditions changed first amid the renewed trade war between the U.S. and Canada. As a result, the broader crypto market retraced.
As the market retraced, ASTER fell from $0.77, breached the $0.7 support, plunging to a low of $0.61, marking a 15% drop before slightly rising.
As of this writing, ASTER traded at around $0.63, making an 8.3% drop on the daily charts. Over the same period, the altcoin’s trading volume dropped by 50%, indicating reduced market activity.
ASTER rising liquidation risks trigger panic exits
After ASTER dropped from the recent pump, traders who were anticipating continued rallies were forced out of the market.
In fact, we saw long positions’ liquidations rise significantly. Over the past day, over $4.6 million worth of longs were liquidated.
This long squeeze prompted other traders to hurriedly close their positions, fearing liquidation. According to CoinGlass data, ASTER’s Open Interest dropped by 18.8% to $309.1 million, while derivatives volume plunged by 47% to $434 million.
Dropping OI and volume in tandem suggested that traders were actively reducing exposure. These market exits look more prevalent upon gauging the perps and Futures outflows.
According to Coinalyze data, Perpetuals Sell Volume rose to 28 million while buy volume dropped to 17.8. As a result, Delta volume dropped to -10.2 million with net buying at -28 million, a clear sign of aggressive selling.
The same pattern emerged as Futures outflows rose to $80.4 million while inflows dropped to $66.6 million. The Netflow dropped to –13.76 million, further confirming this selling activity.
When derivative markets see such extreme selling pressure, it suggests that speculation has faded. Often when these traders exit the market, it tends to experience price shock, thus causing price drops.
Can the altcoin sustain the pressure?
With intense sell pressure, ASTER’s bullish momentum has weakened substantially. In fact, the altcoin’s Relative Strength Index (RSI) dropped to 54 from 87.
The drop to these levels suggests a weakening market structure, with intense selling pressure. However, since it still holds above 50, it means that buyers are still active and sellers have yet to fully retake the market.
If the pressure continues, the RSI will drop below 50, which will confirm the bearish trend. In doing so, ASTER will drop below $0.6, with $0.59 as key support.
To invalidate this bearish outlook, the altcoin needs to have a daily close above $0.65.
Final Summary
- ASTER fell from $0.77, breached the $0.7 support, plunging to a low of $0.61, marking a 15% drop before slightly rising.
- ASTER declined as $4.6 million in long liquidations triggered a wave of panic exits across the derivatives market.