• TIA surges 25% in one week, hinting at a positive turnaround following a five-month downtrend.

  • Traders continue to short TIA perpetual futures, negative funding rates suggest.

  • TIA's rally may have legs, according to one observer.

Data availability blockchain network Celestia's native cryptocurrency TIA has jumped 25% to $7.30 this week, registering the best performance among the top 100 digital assets by market value.

Traders seem skeptical about the ongoing price surge and are taking bearish bets by shorting perpetual futures tied to the cryptocurrency, according to funding rates tracked by CoinGlass.

Average funding rates across exchanges flipped negative over the weekend and have dropped to -0.1231% since then, reaching levels last seen in January. In other words, bias for bearish bets is most pronounced in six months.

Calculated and collected from traders every eight hours, funding rates represent the cost of holding bullish or bearish bets. A negative rate implies that traders with short positions, betting on a price drop, are paying a funding fee to longs. It occurs when there is a high demand for short positions relative to long positions.

TIA

TIA open interest (OI)-weighted funding rates. Open interest is the dollar value of the total active perpetual contracts. (Coinglass) (Coinglass)

The bias for shorts amid a price rally looks like a classic case of recency bias, whereby trades are placing more weight on the TIA's price crash in recent months than other vital developments. TIA's latest bounce comes after a five-month downtrend that saw prices slide 80% from $21 to less than $5. As such, it's not particularly surprising to see traders sell the bounce.

However, traders could be overlooking modular blockchain Celestia's role as a data availability layer for layer 2 networks like the booming permissionless liquidity layer for Web3 trading, Orderly Network, which means the price bounce could be sustainable.

"The need for a data availability layer here makes sense after realizing that safe/permissionless liquidity is by far one of the biggest hurdles in making onchain perps markets usable. So having a middle layer that can provide shared liquidity to any exchange seems like an obvious solution moving forward," psuedonymous analyst DeFi^2 explained on X.

"As an actual core piece of infrastructure for cases like this, Celestia has a lot of the right factors coming together this week for a strong market bottom to be put in, including the Modular Summit taking place this week with Celestia at the center of it," DeFi^2 added.

Celestia, a modular blockchain, separates consensus from execution, boosting scalability. It acts like a storage system for data used by rollups and layer 2 networks, helping them become faster and handle more transactions.

Orderly Network, a permissionless liquidity layer and infrastructure provider for Web3 trading built on top of the Near blockchain, uses Celestia for data availability. On July 5, Orderly Network's cumulative trading volume reached a record $6.2 billion, with cumulative net fees exceeding $6.6 million while accounting for 40% of the total data posted on the Celestia network, the network told CoinDesk in an email.

Besides, the bias for short positions could catalyze further price rise. The funding fee that traders holding shorts are currently paying will become a burden if prices remain resilient, eventually forcing them to square off their bearish bets. That, in turn, could bump up prices in what is a known as a short squeeze rally.


All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by CoinDesk constitutes an investment recommendation, nor should any data or Content published by CoinDesk be relied upon for any investment activities. CoinDesk strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.

Join Telegram

Recommended content


Recommended Content

Editors’ Picks

Ripple extends gains by 5% on Friday as CEO hints at institutional crypto products with CME XRP-Dollar index

Ripple extends gains by 5% on Friday as CEO hints at institutional crypto products with CME XRP-Dollar index

Ripple (XRP) traders’ sentiment turned positive on Friday, as CEO Brad Garlinghouse highlighted the addition of XRP-Dollar reference rate and indices to the CME Group and CF Benchmarks. 

More Ripple News

Worldcoin crumbles under selling pressure even as OpenAI eyes human-level problem-solving

Worldcoin crumbles under selling pressure even as OpenAI eyes human-level problem-solving

OpenAI, the American tech firm behind the Large Language Model ChatGPT, announced five levels towards building an Artificial General Intelligence (AGI). Employees at the firm told Bloomberg that with ChatGPT, Open AI is currently at level one. 

More Worldcoin News

VeChain break above descending trendline sparks rally speculation

VeChain break above descending trendline sparks rally speculation

VeChain price breaks above the descending trendline, suggesting a bullish move. Sideline buyers can accumulate VET between $0.0247 and $0.0239. A daily candlestick close below $0.0204 would invalidate the bullish thesis.

More VeChain News

Bitcoin Weekly Forecast: Investors wonder if BTC troubles are behind

Bitcoin Weekly Forecast: Investors wonder if BTC troubles are behind

Bitcoin (BTC) stabilized around the $57,000 mark this week, while the German Government persists in transferring Bitcoin to exchanges. Concurrently, US spot Bitcoin ETFs have recorded inflows. 

More Bitcoin News

Bitcoin: Investors wonder if BTC troubles are behind

Bitcoin: Investors wonder if BTC troubles are behind

Bitcoin (BTC) stabilized around the $57,000 mark this week, while the German Government persists in transferring Bitcoin to exchanges. Concurrently, US spot Bitcoin ETFs have recorded inflows. On-chain analytics indicate that whales are accumulating BTC during dips, potentially foreshadowing an imminent rally in the days ahead.

 

Read full analysis

BTC

ETH

XRP