SKY crypto rallies amid $94M TVL boost – But is a pullback next?

Key Takeaways

What signals growing investor confidence in SKY’s potential rally? 

A $94 million TVL surge and $3.61 million in rewards indicate strong investor commitment and optimism.

What do the derivatives market reveal about SKY’s short-term outlook? 

A rising Long-to-Short Ratio and increased Open Interest suggest bullish sentiment, despite a possible short-term pullback.

Sky [SKY] has gradually emerged as a preferred destination for on-chain investors as the broader crypto market capitalization reclaims the $3.5 trillion mark.

The liquidity inflow has pushed SKY’s price up by 7% within 24 hours, at press time, with growing sentiment suggesting that further recovery may be near.

Investors increase their exposure

Investors have doubled down on their positions as the total value locked (TVL) rose notably.

A $94 million inflow of SKY tokens was recorded between November 12 and today, as investors deposited their assets into liquidity pools.

These pools reward deposited funds through incentives, but more importantly, a sharp climb in TVL, especially of this magnitude, often indicates investor confidence in a potential rally for the token.

This allows them to earn on both price appreciation and rewards.

Source: DeFiLlama

So far, these incentives have yielded positive returns, with $3.61 million paid out to participating investors within the same period.

A similar trend is visible off-chain on centralized exchanges, where spot investors have added more SKY to their portfolios. However, current buying activity has slowed slightly, with only $258,000 worth of SKY purchased during this timeframe.

Liquidity surge in derivatives

The derivatives market has also seen a notable increase in liquidity. Data from CoinGlass shows a significant rise in open contract positions, with Open Interest (OI) reaching $20.46 million, an increase of $4 million.

While a liquidity surge alone does not confirm a bullish market, perpetual trading data shows higher buying volumes than selling.

The Long-to-Short Ratio has remained above the neutral level of 1, and was showing 1.046, at the time of writing, confirming a dominance of long positions.

Source: CoinGlass

The OI-Weighted Funding Rate and related metrics indicate that most of the circulating liquidity is coming from long traders, who continue to pay funding fees to maintain price parity between the spot and perpetual markets.

Short-term pullback before a broader rally

The liquidation heatmap suggests that SKY may face a short-term decline before resuming a broader upward rally.

The heatmap shows liquidity clusters below the current price, marked in different shades of green, which often act as price magnets and demand zones.

A dip into these price levels could activate fresh buy orders and spark a potential rebound. If momentum builds from this zone, SKY could rally back to its October 14 high of $0.065.

Source: CoinGlass

Overall, market sentiment remains strongly bullish for SKY, and a new high appears likely in the coming days.