KAITO Bulls Retreat After 25% Price Plunge — $1 Support on the Edge

Key Takeaways

• KAITO’s Open Interest has declined below $150 million, indicating decreasing exposure to the altcoin.
• The funding rate has turned negative, suggesting that most traders expect the price correction to extend.
• Indicators on the 4-hour chart reveal that KAITO might not experience a quick bounce to its all-time high.
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Unlike the same week when it launched, Kaito (KAITO) is part of today’s top losers. In the last 24 hours, the KAITO token price has fallen by 25%.

This leaves the cryptocurrency’s value nearly 50% below its all-time high on Feb. 27. The decline also indicates growing bearish momentum, as it seems that bullish sentiment around it has completely faded.

With buyers failing to step in at this crucial time, KAITO’s price risk falls even lower.

KAITO Buying Pressure Fades

KAITO’s all-time high is $2.88 days after the project airdropped tokens to eligible users. During that period, the total Open Interest (OI) was nearly $150 million.

The OI is the value of the total number of open positions in a contract. Since every trade has a buyer and a seller, OI always consists of 50% longs and 50% shorts.

It rises or falls based on net open positioning. A price increase alongside rising OI doesn’t mean there are more longs than shorts—rather, it suggests buyers are more aggressive, which is a bullish sign.

On the other hand, a drop in OI signals a reduction in overall positioning. According to Santiment, KAITO’s OI has dropped below $55 million, indicating that trades have reduced exposure to the cryptocurrency.

This also indicates a decline in liquidity allocated to related contracts in the market. Should this remain the same or intensify, KAITO’s price might continue to hit new lows

Market Sentiment Turns Bearish

Despite the mass trader exodus, the Funding Rate confirms that some KAITO positions remain open. Funding Rate is the cost of holding an open position in the market.

When it is positive, it means long positions (bulls) are dominant. In this case, these bulls are paying shorts (bears) a funding fee to keep their positions open.

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A negative funding rate indicates otherwise, as the broader sentiment is bearish. So, with a negative rate, it appears that KAITO bulls are out of the picture, and demand could continue to dwindle.

KAITO Price Recovery Could Be a Distant Dream

Looking at KAITO from the technical side, the 4-hour chart shows that the Awesome Oscillator (AO) has dropped into negative territory. The decline in the AO reading indicates bearish momentum.

Therefore, the KAITO token price is unlikely to recover soon. In line with the AO position, the Average Directional Index (ADX) reading has risen above 25.

The ADX measures directional strength. A reading below 25 indicates weak directional strength.

But when it is above it, it indicates a strong directional movement. Therefore, if the ADX reading remains elevated and KAITO’s price fails to jump, another correction could follow.

This time, the cryptocurrency’s value could drop below the $1 support and slide to $0.77 at the 0.236 Fibonacci retracement level.

However, if the directional strength becomes weak, this trend might change. In that case, KAITO could bounce to $2.32.