AVNT Primed for Long Squeeze: Funding Rates Plunge, Open Interest High
AVNT presents a significant long squeeze opportunity due to its high open interest of $3.94M and deeply negative average daily funding rate of -5.280%. The decreasing funding rate trend suggests continued bearish sentiment, potentially triggering cascading liquidations if the price declines further.
Key Metrics
Analysis
AVNT is currently trading at $0.35 and exhibits a strongly negative average daily funding rate of -5.280%, indicating a significant imbalance between long and short positions. The funding rate trend is decreasing, suggesting that shorts are increasingly willing to pay longs to hold their positions. This dynamic creates a highly vulnerable environment for a long squeeze.
The high open interest of $3.94M further exacerbates the situation. A relatively small price decline could trigger a wave of liquidations, forcing leveraged long traders to cover their positions and pushing the price down even faster. The disparity in funding rates across exchanges, with Lighter offering -7.049% and Bybit at -6.000%, underscores the concentrated short pressure.
Key price levels to watch are the recent lows around $0.33 and $0.30. Breaching these levels could trigger significant liquidation cascades. Conversely, a sustained move above $0.38 could alleviate some pressure, at least temporarily.
Compared to other potential long squeeze candidates, AVNT stands out due to the magnitude and consistent negativity of its funding rate. While other coins might have negative funding, AVNT's is exceptionally high, indicating extreme crowding on the long side.
Without historical context data beyond the current date, it's difficult to compare against prior instances. However, the current setup demonstrates a classic long squeeze scenario.
Risk Assessment
The primary risk is a sudden reversal in market sentiment. A positive news catalyst or unexpected buying pressure could trigger a short squeeze instead, leading to rapid price appreciation. Monitoring news and social sentiment is crucial.
Another risk factor is the potential for whales to manipulate the market, either by artificially suppressing the price to trigger liquidations or by initiating a pump to trap short sellers. Close attention should be paid to order book activity and large volume trades.
Warning signs include a sudden increase in funding rates (turning positive) or a significant surge in price without corresponding volume. These signals could indicate that the long squeeze is no longer viable.
Trading Strategy
A delta-neutral trading strategy could involve shorting AVNT on exchanges with high negative funding rates (e.g., Lighter, Bybit) while simultaneously longing AVNT on spot markets or exchanges with less negative or even positive funding. The goal is to profit from the funding rate differential while remaining market neutral.
Entry consideration: Initiate the short position when AVNT breaks below a key support level, such as $0.33. Place stop-loss orders slightly above recent highs, around $0.39, to protect against a potential short squeeze reversal.
Exit consideration: Close the short position if funding rates start to normalize (become less negative or turn positive) or if the price rebounds significantly, signaling a potential end to the long squeeze.
Exchange Data
| Exchange | Price | Funding Rate | Open Interest |
|---|---|---|---|
| Lighter | $0.344 | -2.3496% | - |
| Bybit | $0.347 | -1.0000% | - |
| Backpack | $0.344 | -0.1880% | - |
| Aster | $0.345 | -1.1860% | - |
Disclaimer: This analysis is for informational purposes only and should not be considered as financial advice. Cryptocurrency trading involves substantial risk and may not be suitable for all investors. Past performance is not indicative of future results. Always do your own research before making investment decisions.