FET’s short-term fate decided: Is it a bull trap or blast-off?

Key Takeaways

What major factor backed FET’s recent rally?

A month of accumulation, with over $69 million spent on purchases, reflecting bullish sentiment.

What does the derivative market suggest about FET’s immediate price direction?

The Open Interest Weighted Funding Rate and trading volume indicate a bullish short-term outlook driven by long contracts.

Fetch.ai [FET] has recorded a major upswing in the past 24 hours, gaining around 11%.

This comes amid a period of turbulence and restructuring, following Ocean Protocol’s exit from a previous partnership, which resulted in a token dispute.

The recent gain appears positive for FET; however, its sustainability remains subject to several influencing factors.

Investor confidence returns

The recent FET rally comes as investors regain confidence in the asset and its potential trajectory.

The Community Sentiment indicator, a tool used to track market perception, reflects this recovery, showing that 96% of investors are now bullish on the asset.

AMBCrypto’s analysis shows that despite the latest price surge, the buildup leading to this rally has been in motion for a month.

Source: CoinGlass

Throughout October, investors accumulated $69.5 million worth of FET from the market, with each week closing in net purchases.

This accumulation trend often occurs when investors believe an asset is undervalued and seek to take advantage of the discount to buy at lower prices before an expected rebound.

Short-term driver

The short-term outlook for FET appears bullish. AMBCrypto examined derivative market sentiments to determine this position.

The Open Interest Weighted Funding Rate, which tracks available liquidity and identifies where most of it is concentrated, suggests a bullish setup.

This situation occurs when the OI Weighted Funding Rate turns positive, implying that the majority of market liquidity comes from long contracts, as those traders pay the funding fee.

Source: CoinGlass

Likewise, the trading volume in the derivatives market confirms that most of the active positions are from long contracts.

Typically, derivatives activity plays a significant role in determining an asset’s short-term direction. With sentiment tilted bullish, a rally remains likely for FET in the near term.

Liquidation maps out path

The liquidation heatmap indicates that FET could indeed rally further, but still faces the risk of a decline.

If momentum continues to build, FET could extend its rally to the upside, potentially reaching new highs.

Source: CoinGlass

However, there are larger liquidity clusters below the current price, which could weigh on the asset and push it lower if bullish momentum fails to hold.

For now, the short-term outlook for FET remains bullish, though investors should remain cautious of potential volatility in the market.