- KAIA experienced a significant market gain in the last 24 hours, surpassing a crucial resistance level.
- Despite low liquidity, analysis suggests that KAIA has a strong chance of sustaining its upward movement.
Over the past 24 hours, Kaia [KAIA] saw a notable market surge, increasing by 14%, although it remains down by 2.14% for the month overall.
Despite concerns about liquidity, market sentiment remains positive, indicating that KAIA’s upward trend is likely to continue.
Decreasing liquidity suggests reduced network utility
Currently, KAIA is facing challenges with liquidity as investors are largely withdrawing their staking positions.
Data reveals that the Total Value Locked (TVL), a significant metric for assessing investor sentiment in blockchain ecosystems, has been steadily decreasing.
Source: DeFiLlama
From its peak of $32.49 million on April 23rd, the TVL has been consistently decreasing, reaching $28.15 million at the time of writing, marking a decline of $4.34 million.
Interestingly, the reduction in investor deposits in KAIA-based protocols has coincided with a significant drop in trading activity on Decentralized Exchanges (DEXs).
Currently, the trading volume has decreased from a yearly high of $231,036 to just $74,811.
Source: DeFiLlama
This significant decline suggests that traders are moving away from the chain, reducing the utility of KAIA and exerting downward pressure on its price.
Despite bearish indicators, the market has reacted positively, with KAIA experiencing a notable surge even as traders exit the market.
Bullish breakout on the chart, but RSI signals caution
The recent rally in KAIA followed a breakout above a major resistance level, according to chart analysis.
This level was part of a broader descending market channel that typically precedes an upward market reversal.
After breaching the resistance line, KAIA started climbing towards the peak of the channel, indicating a potential price target in the $0.134 to $0.135 range.
Source: TradingView
While this breakout suggests further upside potential, technical indicators show signs of buyer exhaustion.
The Relative Strength Index (RSI) confirms this, entering the overbought zone above 70 and currently at 79.17, indicating a potential price correction.
Bullish on-chain metrics – Traders bullish on KAIA
Despite technical caution, market participants are increasing long positions, with Open Interest (OI) and overall trading volume rising significantly.
At present, OI has surged by 109% to reach $25.87 million.
Analyzing the Open Interest Weighted Funding Rate, which has turned positive, supports the bullish outlook despite no guarantee of a continued rally.
Source: CoinGlass
A positive OI Weighted Funding Rate indicates that long traders dominate the market and are paying higher fees to maintain their positions.
With a Long-to-Short ratio of 1.0338, buying pressure in derivatives markets outweighs selling activity, strengthening the case for KAIA’s rally to continue.
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