Midnight [NIGHT], the privacy blockchain based on zero-knowledge, is experiencing a shift in market sentiment.
The trading volume has dropped by 50% to $3.97 billion in the last 24 hours, indicating that investors are withdrawing capital. However, this seems to be a rotation rather than a complete exit, as the overall investor base continues to grow.
Earlier reports showed a decline in investor numbers from a peak of 6,880 to 6,210. The latest data reveals a further drop to 6,110 on December 20th before rebounding to 6,500.
Despite a $430 million increase in market capitalization, NIGHT’s value decreased from $1.94 billion to $1.52 billion, indicating a short-term bias towards sellers.
This shift sets the stage for a deeper analysis of what may happen next.
Derivatives drive short-term pressure
Signals from the derivatives market suggest that NIGHT is entering a bearish phase as liquidity exits.
Derivatives data indicates a capital outflow, with Open Interest (OI) dropping by 12% and $12.7 million leaving the market, reducing OI to around $106 million.
Source: CoinGlass
The Open Interest-Weighted Funding Rate turned negative during this period, suggesting more short positions than long contracts in the market.
Investors accumulate regardless
Selling pressure is mainly from perpetual traders looking for NIGHT’s downside.
Spot market participants remain bullish, with capital flowing into the asset.
Recent data shows strong spot accumulation, indicating a tightening supply of NIGHT tokens.
Source: CoinGlass
Data indicates that previous buying activity led to a 67% price rally, despite bearish market conditions.
The Accumulation/Distribution indicator shows ongoing accumulation, with total volume at 357 million, reinforcing the spot-buy thesis.
Analysis of the liquidation heatmap suggests a bullish outcome for NIGHT, with limited downside risk.
Source: CoinGlass
Overall, the strong accumulation in the spot market indicates a bullish trend for NIGHT.
The recent pullback seems to be a temporary retracement rather than a reversal, setting the stage for an upward move if sentiment remains positive.
Final Thoughts
- NIGHT sees a $10 million outflow in the derivatives market as short contracts increase.
- A $46 million spot-market buy and continued accumulation support a bullish case for the asset.
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