0G drops 21%, tests KEY support – Is a bull trap ahead?

Key Takeaways 

Why is 0G facing further downside risk?

Technical indicators like MFI at 30 and RSI below 50 suggest weakening momentum, signaling bearish pressure on 0G.

 Who is driving the recent 0G market decline?

Perpetual traders dominate the derivatives market, with $18.3 million exiting and a negative OI-Weighted Funding Rate of -0.0879%.

0G [0G] stumbled in the past 24 hours. The asset, which had been forming new highs, now faces the threat of further decline after losing 21%, at press time.

Trading volume also fell, dropping to around half a billion—precisely $512 million—showing that weak hands are exiting the market.

How this plays out for 0G remains uncertain, according to AMBCrypto’s analysis.

Support level reached

The 1-hour support level analysis shows that 0G has taken a sharp drop after recently setting a new high.

This drop does not necessarily mark the beginning or end of a broader decline, as the chart indicates it coincides with a key support zone.

Source: TradingView

This level has been instrumental in 0G’s previous rallies, with one of the latest instances leading to the $0.34 high on the 23rd of September.

If it holds, a possible push forward could occur, similar to past scenarios when the token traded along this level.

The big question: Will 0G maintain its bullish momentum and push higher from here?

Support level may be a trap

However, the support level could prove a trap for investors expecting a rebound, turning into a bull trap. Technical indicators lean bearish.

At press time, the Money Flow Index (MFI), which tracks liquidity flowing in and out of an asset, fell to 30, entering bearish territory below the neutral 50 mark. This drop indicates growing bearish sentiment among investors. 

The Relative Strength Index (RSI) also points to potential downside, slipping just below the bullish threshold to 49, signaling weakening momentum.

Source: TradingView

If both indicators continue trending lower, they would confirm that the support level may fail to spark an upward push, triggering liquidations for long traders.

Presently, liquidation data shows $2.87 million in long contracts closed compared to $874,000 in shorts—a clear sign the market is leaning bearish.

Blame the perpetual investors

If any group of investors is responsible for the recent drop, it is perpetual traders. Over the past days, $18.3 million worth of 0G exited the market, while Open Interest (OI) fell to $81.13 million, as of writing.

This decline in OI alone does not confirm whether bulls or bears control the market—it only shows a reduction in contractual value.

Source: CoinGlass

However, the OI-Weighted Funding Rate turning negative confirmed bearish dominance.

A rate of -0.0879% implies that most liquidity in the derivatives market comes from bears, suggesting the market may continue trending downward.