Despite the recent price increase, TIA is still down 65% from its all-time high of $20.91 reached in February.
Celestia’s native cryptocurrency TIA has jumped 25% this week, reaching $7.30. This surge makes TIA one of the top performers among the leading 100 digital assets.
Despite this significant rise, many traders remain skeptical and are shorting TIA perpetual futures, as shown by the negative funding rates tracked by CoinGlass.
Negative Funding Rates Indicate Bearish Sentiment
Funding rates across exchanges turned negative over the weekend, falling to -0.1231%, levels not seen since January. This suggests that traders are betting against Celestia’s TIA, despite its recent price increase.
Funding rates refer to periodic fees paid between traders to maintain their positions in perpetual futures contracts. A negative funding rate, like the one currently in play with TIA, indicates that short positions are paying funding fees to long positions, reflecting a bearish sentiment.
The bearish sentiment amid the TIA rally demonstrates a possible recency bias, where traders are influenced by TIA’s five-month downtrend that saw its price drop from $21 to below $5. Currently, TIA faces a critical resistance level at its 200-day exponential moving average (EMA) of $7.74. This level represents a significant hurdle for further upward momentum, with market sentiment closely monitoring TIA’s ability to breach and sustain above this threshold.
The ongoing short positions might ironically push TIA’s price even higher. If TIA remains stable or continues to climb, the funding fees paid by short traders will become a financial strain, potentially forcing them to close their positions. This could lead to a short squeeze, driving the price up further. A short squeeze occurs when a heavily shorted asset experiences a rapid price increase. This forces traders who bet against the asset to buy it back to cover their positions and limit losses.
Despite the recent price increase, TIA is still down 65% from its all-time high of $20.91 reached in February. The token’s recent performance has renewed interest and optimism among investors, while traders continue to show bearish sentiment.
Celestia’s Role in the Blockchain Ecosystem
Celestia adopts a modular blockchain approach, moving away from conventional monolithic structures. This method uses data availability sampling (DAS) rather than traditional consensus mechanisms, improving scalability and reducing settlement bottlenecks.
The modular blockchain approach has been gaining traction, and Celestia has already onboarded an array of major players to its network. For instance, Celestia has integrated with Orderly Network, a leading platform for permissionless liquidity in Web3 trading which facilitates over half a billion dollars in daily trading volume.
Pseudonymous analyst DeFi^2 emphasized on social media that the need for a data availability layer is evident, given the importance of secure, permissionless liquidity for on-chain perpetual markets. DeFi^2 highlighted that Celestia’s infrastructure capabilities could lead to a strong market bottom, especially with the ongoing Modular Summit where Celestia is prominently featured.
next