0G [0G] has recently experienced a significant setback, plummeting by 21% after a period of setting new highs. This sharp decline, coupled with a halving of trading volume, raises critical questions about the asset's immediate future and whether a key support level can avert further losses.
Technical Indicators Signal Bearish Pressure
Despite reaching a crucial 1-hour support level that previously sparked rallies, there's growing concern that this zone might act as a bull trap for unsuspecting investors. Technical indicators strongly lean bearish, with the Money Flow Index (MFI) dropping to 30, firmly in bearish territory, and the Relative Strength Index (RSI) slipping below the neutral 50 mark to 49, indicating weakening momentum. This bearish confluence is further supported by liquidation data, showing a significantly higher volume of long contracts ($2.87 million) being closed compared to short contracts ($874,000), reinforcing the market's negative sentiment.
Perpetual Traders Fuel the Downtrend
The primary drivers behind 0G's recent downturn appear to be perpetual traders in the derivatives market. A substantial $18.3 million worth of 0G has exited the market in recent days, contributing to a fall in Open Interest (OI) to $81.13 million. More tellingly, the OI-Weighted Funding Rate has turned negative at -0.0879%. This crucial metric signifies that bears are currently providing the majority of liquidity in the derivatives market, suggesting a strong likelihood of continued downward pressure on 0G's price.
