The Solana-based meme token BONK strengthened its position in the market by ranking 69th on CoinGecko’s list of the most valuable digital currencies, marking a significant milestone as its market capitalization exceeded $1 billion for the first time. As Bonk witnessed a skyrocketing surge in the last few hours, bears are now heavily shorting the meme coin, creating concerns of an immediate decline.
Bonk’s Funding Rate Becomes Negative
Bonk (BONK) experienced a massive 1,200% increase in its value over a month, crossing the $2 billion mark in market capitalization. This surge is thought to be partially influenced by its connection with the well-performing Solana. Additionally, the meme coin’s momentum was likely fueled by Coinbase announcing BONK’s inclusion in its future plans and its listing on the platform.
According to Coinglass, Bonk’s recent surge triggered a massive short-liquidation of nearly $1.6 million. However, its recent surge is now facing a halt as bears are increasingly opening short positions near the high.
In the perpetual futures market linked to Bonk, traders are showing a bearish inclination as this meme coin struggles near resistance. According to Coinglass, the open interest and volume-weighted funding rates in perpetual futures have declined to -1.5%. This indicates that short positions, which gain from a decrease in price, are dominant.
Traders holding these positions are prepared to pay those with long positions to maintain their bets on a price drop. Currently, Bonk is being heavily shorted; however, this increases the chances of a short squeeze.
A short squeeze occurs when there is a sudden upward movement in price, triggered by bears closing out their bearish positions. This typically requires an unusually high level of bearish activity, as currently seen in Bonk perpetual futures. In these scenarios, even a slight increase in price can force short sellers to cover their positions quickly. This action can then create a bullish effect, further sending prices upward.
What’s Next For Bonk Price?
Bonk price faced resistance at $0.000035 as bears aggressively defended a surge and declined toward the 23.6% Fib channel. However, buyers aim to accumulate near the current dip. As of writing, Bonk price trades at $0.0000278, surging over 92% from yesterday’s rate.
Should there be a significant recovery from the 20-day EMA, it would indicate that traders are actively purchasing during price dips. Following this, the bulls might attempt again to surpass the $0.000035 level. A successful breach could send the price toward another high.
Conversely, this bullish scenario could be invalidated if the price continues to fall, breaking below the 20-day EMA. With the RSI hovering around the overbought region, short-term sellers are gaining confidence for a correction. Such a move might lead the price to drop toward its breakout point of $0.0000123. However, this level might see increased buying pressure.
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