Onyxcoin (XCN) has experienced a significant drop, falling by 22% in the past 24 hours and hitting a 30-day low of $0.015.
The prevailing sentiment towards this altcoin remains bearish, signaling the potential for further price decreases. Here's why.
Traders of Onyxcoin Hold a Bearish Outlook
XCN's persistently negative funding rate is a key indicator of the prevailing bearish sentiment surrounding it. According to Coinglass, the altcoin has maintained a consistently negative funding rate since December 9, currently standing at -0.17%.
The funding rate serves as a fee that is periodically exchanged between long and short traders in perpetual futures contracts to ensure price alignment with the spot market. A negative rate implies that short traders are compensating long traders, indicating the predominance of bearish sentiment among XCN traders and an anticipation of more price drops.
Moreover, XCN's open interest has been declining, underscoring the lackluster demand for the altcoin in the market. Coinglass data reveals that the current open interest stands at $6 million, its lowest level in a month.
Open interest quantifies the total number of outstanding derivative contracts for an asset, such as futures or options, that have yet to be settled. A drop in open interest concurrent with a decline in the asset's price, as seen with XCN, indicates reduced market participation, with traders opting to close existing positions rather than initiate new trades.
This pattern suggests that the decrease in XCN's price is primarily driven by liquidation or profit-taking activities rather than fresh short-selling, diminishing the probability of a rapid short-term recovery.
Bearish Signals Hover Over XCN
A glance at the daily chart reveals that XCN is trading below the Leading Spans A and B of its Ichimoku Cloud indicator. This technical tool gauges market trends for an asset and identifies potential support and resistance levels. A drop below the cloud signifies a downtrend in the market.
In this instance, the cloud acts as a dynamic resistance threshold for XCN, confirming expectations of continued price slippage as long as the value remains beneath the cloud and demand continues to wane. Should this trajectory persist, XCN's value could slide to $0.011.
Alternatively, a resurgence in buying activity could catapult XCN's value to $0.022.