Bonk (BONK), the Solana-based meme coin, took a tumble on Monday, August 5th, plummeting to a new low of $0.000015. This dramatic drop sent shivers down the spines of leveraged traders, causing a significant decrease in open positions. However, according to recent data, futures traders appear to be brushing off the dust and turning bullish once again.
Funding Rate Flips Signal Shift In Sentiment
One key indicator of trader sentiment is the Funding Rate. This metric reflects the cost of holding open leveraged positions and acts as a barometer for investor expectations. A positive funding rate suggests a bullish market where longs (buyers) pay shorts (sellers) a fee. Conversely, a negative rate indicates a bearish market where shorts pay longs, anticipating a price decline.
During the initial downturn, the Funding Rate dipped into negative territory, signifying that traders favored short positions. However, as of press time, BONK’s price has rebounded above its previous lows. This positive price action has flipped the Funding Rate positive, suggesting that futures traders are now betting on further price increases. In simpler terms, if BONK continues its upward trajectory and the Funding Rate stays positive, leveraged long positions will become more profitable. But this hinges on sustained buying pressure in the spot market, where actual cryptocurrency trades occur.
Social Sentiment Warms Up
The shift in sentiment isn’t limited to the futures market. According to Santiment, a platform that analyzes social media data, the Weighted Sentiment surrounding Bonk has transitioned from negative to positive. Weighted Sentiment uses social volume to gauge market perception of a cryptocurrency project. A negative score implies pessimism on social media, while a positive rating, like the one Bonk currently enjoys, signifies a rise in optimistic discussions.
Bullish Pattern Emerges on BONK Chart
Looking at the technical side of things, BONK’s daily chart reveals a potentially bullish pattern – a cup and handle formation. This pattern typically emerges after a cryptocurrency experiences a downtrend, followed by a recovery, and then another consolidation period with a slight dip. In BONK’s case, confirmation of a bullish continuation hinges on a price breakout above the downtrend line. If buying pressure intensifies, BONK could climb to $0.000025 in the near future.
Also Read: Bitcoin Boost Ignites Meme Coin Mania – WIF, PEPE, And BONK Set For 200%+ August Gains
A successful breach of this level might propel the meme coin towards its upper resistance of $0.000029. However, a crucial factor to consider is the Relative Strength Index (RSI), a momentum indicator. As of now, the RSI hasn’t crossed the neutral line, suggesting the market might be lacking some steam. A decisive break above the 50.00 RSI midpoint could solidify the bullish thesis and potentially trigger a significant price increase for BONK. Conversely, failure to surpass this level might leave the token stuck between $0.000019 and $0.000021.
While Bonk’s recent rally is encouraging for optimistic traders, it’s important to remember that the cryptocurrency market remains volatile. Keeping a close eye on technical indicators, social sentiment, and overall market trends will be crucial for navigating the future of Bonk.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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