Kaspa rally powered by leverage, not users – Is a KAS pullback ahead?

Key Takeaways

What is driving Kaspa’s recent rally? 

Derivative inflows, with open interest surging 42% in 24 hours, are fueling the momentum.

Does on-chain data support the rally? 

No, declining active addresses and weak UTXO signals suggest caution and potential downside risk.

Kaspa [KAS], the layer-1 blockchain token, has been on investors’ watchlists as it records this new capital inflow.

The momentum, largely driven by derivatives, does not align with several on-chain factors, signaling that a potential decline is increasingly visible.

Derivative inflows spark the rally

Kaspa’s derivative market has seen a major surge in inflows, as recorded through open interest over the past day.

At press time, Open Interest (OI), which assigns a dollar value to liquidity circulating in the derivatives market, showed that Kaspa’s $66.92 million valuation represents a 42% increase in just 24 hours.

Of the additional $27.9 million added, most were controlled by bullish investors, as reflected in the positive OI Weighted Funding Rate of 0.0035%.

Source: CoinGlass

A positive weighted average indicates that most circulating funds come from investors opening new contracts in anticipation of a rally.

This surge comes with a caution: when a rally is driven by high leverage rather than broader market momentum, prices face the risk of a sharp decline.

On-chain data doesn’t support KAS

On-chain data, which tracks user interactions with Kaspa, signals caution in the market.

The most notable indicator is the Unspent Transaction Output (UTXO), which measures cryptocurrency received in a blockchain transaction but not yet spent in subsequent transactions.

A positive UTXO reading suggests accumulation, while a negative reading indicates distribution, signaling that investors are unwilling to hold the asset.

Source: Kaspalytics

Active addresses have fallen sharply. Kaspalytics reports that unique addresses dropped from 513,110 on the the 11th of November to just 11,770, at press time, a decline of about 97.72% 

This indicates weakening investor confidence in the token’s long-term prospects.

At the same time, both account balances and network activity have decreased, showing that investors are cautious and casting doubt on the sustainability of KAS’s recent rally.

Decline, but consolidation remains

The risk of a decline is also visible in the spot market, as retail investors pull out.

Over the last 48 hours, investors sold roughly $1.3 million worth of KAS. However, to assess long-term impact, AMBCrypto analyzed non-zero KAS wallets.

Source: Kaspalytics

Despite recent sell-offs, non-zero balances have remained largely stable. Kaspalytics reports that 54.84 million addresses continue to hold KAS, maintaining this level since the 1st of November.

This stability suggests that even if momentum weakens in upcoming trading sessions, a dramatic drop in KAS is unlikely.