Thursday, June 13, 2024

Floki Inu Frenzy: Memecoin Eyes New Highs As Open Interest Soars

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Floki inu

Floki Inu (FLOKI), the Shiba Inu-inspired memecoin, has rocketed into the spotlight with a surge in trading activity and a nearly 20% price increase in the past week. However, experts caution that this “pup-ularity” might be short-lived, fueled more by hype than by strong foundations.

Open Interest Takes Off: Newcomers Flock To FLOKI

The key indicator driving excitement is the skyrocketing Futures Open Interest for FLOKI. According to Coinglass, this figure, which reflects the number of outstanding futures contracts, has climbed a staggering 110% since May 1st, reaching a 30-day high of nearly $20 million. This suggests a surge of new market participants entering FLOKI positions, potentially anticipating further price increases.

Source: Coinglass

Adding fuel to the fire is the significant rise in FLOKI’s daily trading volume. On May 15th, Santiment reported a daily volume exceeding $1 billion, marking the highest level for FLOKI since late March. This intense buying activity indicates a surge in investor interest, pushing the price upwards.

Source: Santiment

Momentum Indicators Point To A Bullish Charge

Further bolstering the case for a bullish FLOKI is the behavior of its key momentum indicators. Both the Relative Strength Index (RSI) and the Money Flow Index (MFI) currently sit comfortably above their neutral lines, at 62.68 and 65.37 respectively. In simpler terms, these metrics suggest that the price momentum leans towards further gains in the short term.

Total crypto market cap currently at $2.3 trillion. Chart: TradingView

However, beneath the shiny exterior lies a potential cause for concern. The Chaikin Money Flow (CMF), an indicator that measures the buying and selling pressure of an asset, paints a rather bearish picture.

Still In Negative Zone

Despite the price appreciation, FLOKI’s CMF remains firmly in negative territory, currently hovering around -0.11. This suggests that even though the price is rising, the buying pressure might be weakening.

This divergence between price and buying pressure is often seen as a sign of a potential reversal, indicating a rally driven by short-term speculation rather than long-term investor confidence.

While FLOKI’s recent performance is undeniably impressive, the underlying factors suggest a potentially volatile future. The surge in open interest and trading volume hints at a market frenzy, but the negative CMF raises concerns about the rally’s sustainability.

Featured image from Floki, chart from TradingView

Christian Encila

Christian Encila

Christian is a journalist, editor and a former layout design consultant. Alongside his passion for writing, he is an avid fan of cryptocurrency and works tirelessly throughout the week. When he’s not on his computer, you can find him tinkering with his old motorbike as a grease monkey, or lounging on the patio hammock while pondering about artificial intelligence and whether he’ll ever understand his cat’s thoughts and calmness.

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