EOS started a downward trend 53 days ago and despite its recent 27% weekly increase, the altcoin is showing no signs of reversal. As a result, investors are wondering whether the former top 5 cryptocurrency has what it takes to turn around in late 2020 following the resignation of Daniel Larimer, CTO of the development company behind EOS.
The emergence of competing proof-of-stake smart contract platforms like Solana (SOL), Polkadot (DOT), and Avalanche (AVAX) could weigh on this 2017 project. A likely bullish catalyst could be the fact that Block.one, the company responsible for introducing the EOS token, owns more than 160,000 Bitcoin (BTC), according to BitcoinTreasaries.net.
EOS might not be the fancy smart contract network of the day, but it does have a handful of decentralized financial, gaming, stock market, and social applications running. Transaction costs for users are negligible or are often covered by wallets or apps, making it a big contender for non-fungible tokens (NFTs) and social networks.
Having lots of cash is a great strategy for forging great partnerships, and Block.one has raised over $ 300 million from investors including Peter Thiel, Mike Novogratz, and Alan Howard. The EOSIO developer is said to have launched the Bullish Exchange, which will take place on 15.
According to its website, all bullish exchange transactions and status are validated and stored on EOSIO-based blockchains, allowing for instant verification and integrity maintenance. In addition, the company is expected to provide $ 3 billion in assets for bullish liquidity pools.
Retailers are losing confidence after the September crash
To understand how traders trust EOS, given the recent support of $ 4.50, one should analyze the eternal futures data. The instrument is popular with retailers as its price tends to follow the regular spot market. Unlike quarterly futures, you don’t have to manually scroll through expiring contracts.
In any futures contract trade, the bid (buyer) and short term (seller) price are always equated, but their leverage is different. As a result, the exchanges charge a funding rate to the party that needs more leverage, and that fee is paid to the counterparty.
Neutral markets typically have a positive funding rate of 0% to 0.03%, or 0.6% per week, which suggests that long buyers are paying for it.
The data shows that there have been no bullish bets since September 19, when the crypto market slumped and EOS fell from $ 5.25 to $ 4.15 in less than two days. However, the inability of the recent rally to increase leverage can be explained by the EOS price being 25% below its high of $ 6.40 just 30 days ago.
Top dealers sold in the recent rally
To understand how whales and arbitrage tables might have positioned themselves over this period, one should analyze the long-short ratios of top traders.
The index is calculated using clients’ consolidated positions, including spot, perpetual and quarterly futures. This metric provides a broader view of professional traders’ effective net positions by gathering data from multiple markets.
As shown above, the long-short ratio of 1.90 on October 3rd still favors long positions, but is the lowest level since the price crash on September 19th. Interesting is the level of reduction in their bullish positions. Meanwhile, the 3.0 long-short level is now slightly below the previous 30-day average of 3.50.
Both retail and professional traders don’t seem to believe that the bullish market launch will be enough to break the popular downtrend that began in mid-August. Let EOS regain investor confidence. It’s important for investors to show that their decentralized applications are gaining traction as competitors gain ground in the NFT and DeFi arenas.
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