AVNT-USD Primed for Long Squeeze: Funding Rates Bite
AVNT-USD is showing signs of a potential long squeeze due to persistently negative funding rates. The high cost of holding long positions, combined with any negative price action, could trigger significant liquidations and further price declines.
Key Metrics
Current Price
$0.348
Funding Rate
-8.8458%
24h Avg FR
-8.8458%
FR Trend
stable
Est. Liquidation Price
$0.296
Take Profit
$0.3135
-15%
Stop Loss
$0.5052
+45%
Max Leverage (No Liq.)
2x
100% ÷ 45% = 2x
Tradeable Exchanges
Analysis
AVNT-USD is currently trading at $0.35 and exhibiting a significantly negative average daily funding rate of -8.846% on Paradex. This indicates a strong bearish sentiment and a high cost for traders holding long positions. While other exchanges such as simply 'AVNT' have negative funding rates (-6.207%), Paradex's high negative rate makes AVNT-USD our primary focus.
The persistently negative funding rate suggests that a significant number of traders are betting against AVNT-USD and are willing to pay a premium to maintain their short positions. If the price of AVNT-USD were to decline, these leveraged long positions could be forced to liquidate, creating a cascade effect that drives the price even lower – a classic long squeeze.
Key price levels to watch include immediate support around $0.30, followed by $0.25. A break below $0.30 would likely trigger further liquidations and accelerate the squeeze. Resistance is seen at $0.40, a move above which would alleviate some of the short-term pressure.
While other assets like 'AVNT' also exhibit negative funding, the higher magnitude of the negativity on Paradex suggests that AVNT-USD is the more vulnerable. Examining historical funding rates (not available here) would provide further context, but the current data points to a high potential for a squeeze.
The funding rate has been stable, indicating that the short-biased sentiment has been prevailing and potentially entrenched in the market. This stable negativity adds to the squeeze potential, as it discourages new long positions and increases the vulnerability of existing ones.
Risk Assessment
The primary risk lies in unexpected positive news or a market-wide rally that could temporarily reverse the bearish sentiment. A significant surge in trading volume could also invalidate the long squeeze setup if it's accompanied by a substantial influx of new long positions.
Warning signs to watch for include a sudden spike in the price of AVNT-USD or a positive shift in the funding rate. These indicators could suggest that the squeeze is unlikely to materialize or is already playing out in reverse.
It's also crucial to be aware of the overall market sentiment and the performance of Bitcoin and Ethereum, as these major cryptocurrencies can significantly influence the price action of altcoins like AVNT-USD. A significant Bitcoin rally, for example, could invalidate the long squeeze setup even with negative funding rates.
Trading Strategy
A delta-neutral trader could consider opening a short position in AVNT-USD to profit from the potential long squeeze, while simultaneously hedging their risk by purchasing AVNT on spot exchanges. Entry could be considered around the $0.35 level with a stop-loss above $0.40 to limit potential losses if the squeeze fails to materialize. Take profit targets should be set at $0.30 and $0.25. This strategy seeks to capitalize on the expected downward price movement while mitigating exposure to overall market volatility. Consider gradually scaling into and out of the position to manage risk effectively.
Exchange Data
| Exchange | Price | Funding Rate | Open Interest |
|---|---|---|---|
| Paradex | $0.348 | -1.4743% | - |
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.