NEAR Protocol's bullish momentum reversed as the altcoin dropped below $5 support, falling to a low of $4.6. At the time of reporting, NEAR traded around $4.70, representing a 7.9% daily decline.
The price decline coincided with a sharp increase in selling pressure. Spot trading volume jumped 19% to $1.62 billion, signaling heightened trader activity as investors reduced their exposure to the asset.
Long Squeeze Triggers Liquidations
The price drop sparked a long squeeze, with over $20 million worth of leveraged long positions liquidated. This forced investors holding leveraged bets to exit the market, contributing to additional downward pressure.
The liquidations triggered risk-off sentiment across the derivatives market. Open Interest dropped 12.3% to $1.4 billion while derivatives volume surged 12% to $2.97 billion. The combination of falling open interest and rising volume typically reflects traders reducing exposure amid panic selling.
Spot Market Shows Contrasting Activity
While derivatives traders exited positions, spot market participants moved in the opposite direction. The altcoin's Spot Netflow fell to negative $28 million on September 28, marking its lowest level since June. Negative netflow indicates more asset outflows than inflows, historically a sign that buyers are accumulating at lower prices.
This divergence between derivatives panic and spot market accumulation suggests dip buyers are attempting to provide support for a potential price recovery.
Technical Outlook
From a technical standpoint, NEAR's Relative Strength Index formed a bearish crossover and fell to 68, indicating weakening upward momentum. However, the RSI remaining within bullish zones suggests buyers retain significant market influence despite recent selling pressure.
Depending on market conditions, NEAR could experience further near-term weakness if derivative liquidations persist, or could recover if spot market buyers successfully absorb selling pressure.
