Key takeout
Why does 0g face even more downside risk?
Technical indicators such as MFI of 30 and RSI of below 50 suggest weak momentum and bearish pressure at 0g.
Who is driving the recent decline in the 0G market?
Permanent traders dominate the derivatives market, with $18.3 million left, with an OI weighted negative funding rate of -0.0879%.
0g [0G] I’ve stumbled over the past 24 hours. The assets, which had been forming a new high, face the threat of further decline after losing 21% at press.
Trading volumes have also fallen to around 5 billion ($512 million), indicating that the weaker players are coming out of the market.
According to Ambcrypto’s analysis, how this will work at 0g remains uncertain.
Support level has been reached
An hourly support level analysis shows that 0G has dropped sharply after setting a new high recently.
This drop does not necessarily mark the beginning or end of a wider decline, as it indicates that the chart matches the main support zone.
Source: TradingView
This level has contributed to previous rallies at 0G, with one of the latest instances leading to $0.34 on September 23rd.
If it is held, it could result in pushes that could move forward, similar to past scenarios when tokens were traded along this level.
Big question: 0g maintains bullish momentum and pushes higher from here?
The support level may be trap
However, the level of support could prove traps for investors who expect rebound and turn into bull traps. Technical indicators are bearish.
At the time of press, the Money Flow Index (MFI), which tracks liquidity in and out of assets, entered the bearish area under the neutral 50 mark and dropped to 30. The drop shows a growing bearish sentiment among investors.
The relative strength index (RSI) also refers to a potential drawback, indicating that it slips to 49 just below the bullish threshold, resulting in a weaker momentum.
Source: TradingView
If both metrics continue to drop, it will ensure that the support level may not be able to cause an upward push, causing long trader liquidation.
Currently, liquidation data shows that a longer $2.87 million contract is closed compared to the $874,000 shorts.
Debate permanent investors
If a group of investors are responsible for recent declines, it is a permanent trader. Over the past few days, $18.3 million worth of 0G has left the market, with open interest (OI) falling to $81.13 million at the time of writing.
This drop in OI alone does not confirm whether the Bulls or Bears have control over the market. It simply indicates a decline in contractual value.
Source: Coinglass
However, OI-weighted funding rates change negatively confirmed bearish control.
The rate of -0.0879% means that most of the liquidity in the derivatives market comes from the bear, suggesting that the market may continue to move downward.