Aptos has seen some positive price action since Monday, August 7, as it increased by 23% at its highest point. The reason behind the pump was the Microsoft partnership announcement . Aptos plans to utilize Microsoft Azure to introduce a new AI-powered chatbot with more tools to follow.
Many have come forward to express their doubts about this partnership and said that it isn’t a partnership at all, but a paid service and that Microsoft isn’t even aware of this partnership.
With this negative backlash, and with the expected token release scheduled for August 12 for 4.54 million APT tokens to be unlocked, the traders are stacking up shorts on derivatives exchanges. Will that mean the price of APT is going for a sharp downturn?
The price of the ATP token has been on a decline since its all-time high of $20 in January. It went on to decrease by 73% measured to its lowest point since at $5.36, made on June 10.
Since June 10, a recovery was seen, but it was stopped at the significant descending resistance on July 17, leading the price back to its significant ascending support. As a bounce was made, this was the third higher low, and a breakout was seen above the descending resistance with a momentum of 23%.
This paints a bullish picture as we have a higher low, a breakout, and a strong momentum. Based on this would be looking at more upside for Aptos, but let us examine the fundamentals and the situation in the derivatives market which is now turning extremely negative.
The derivatives market data definitely shows a bearish picture. The IO-weighted Funding rate was at its all-time low yesterday, August 9.
It went to 0.0392% at its lowest peak and has since come slightly up, currently sitting at 0.0176%. A negative funding rate indicates that more short sellers are willing to pay funding to long-position traders, thus indicating a bearish sentiment.
However, this should be interpreted with caution as one-sidedness usually leads to squeezes, which can lead to a short squeeze.
More importantly, according to the token release schedule , soon there will be 4.54 million ATP tokens more in circulation on August 12. More specifically, that is over $35 million in ATP tokens that amount to a total of 2% of the circulating supply.
But these tokens won’t flood the market as they are released and are instead allocated to the community and the Aptos Foundation.
With these fundamentals in mind, the picture looks bearish, but if we see a short squeeze take into account that the tokens released won’t cause immediate selling pressure but later in November, it softens the blow.
As the price of ATP broke out from its highly significant descending trendline and made an impulsive increase, looking at the price chart, we can expect at least a higher high.
According to this count, we have seen a five-wave impulse from June 10 when the price fell to $5.41, until July 4, when the price came up to $8.30. An ABC correction followed inside a lower-degree triangle and pushed the price back down to $6.47 on August 7.
This implies that another five-wave structure started on August 7, out of which we have seen four waves. Another higher high for the competition of wave 5 would be expected, with the target projected at the horizontal resistance at $8.25.
Another possibility would be that the rise from August 7 is only the first sub-wave of the expected five-wave structure, or its lower degree count. If this is true, then the price would be expected to move much higher, potentially coming to the 1.618 Fibonacci extension level at $11.
The price rose on the Microsoft partnership announcement. As it had many doubts and has been reframed by the critics as fake, just a paid service, the traders have taken note and got ready to short the asset price.
We have seen a decrease of 8.57% from its yesterday’s peak, so that might just be enough. Tokens released won’t hit the market just yet so there isn’t that much selling pressure in sight.
Chart analysis points out the possibility of another high ahead, and maybe if we see large short liquidations, it could propel the price further upwards.
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