Overview of Flare Crypto’s Recent Success
The Flare cryptocurrency’s value recently received a major boost as its demand drastically increased on Wednesday, and futures open interest attained historically high levels. The Flare (FLR) token surged, reaching its highest peak since January 2021 at $0.0281; an impressive 157% gain from its lowest point this year. The sudden price surge increased its total market capitalization beyond the $1.8 billion mark, with a surge of over 535% in its 24-hour volume, reaching $109 million.
Impressively High Trading Volume for Flare Futures
Alongside the price surge, the trading volume of the Flare token experienced an acceleration, fueled by an increase in demand for the token. The token’s daily spot-market volume soared by 535%, landing it a spot among the most actively traded tokens in the crypto market today.
The trend of increased demand was also observed in the futures market, as Flare’s open interest escalated to a record $10 million. Since dropping to $1.7 million in February, this interest has been steadily on the rise. The rise in open interest indicates an increase in demand and liquidity and is largely seen as a bullish indicator for the cryptocurrency.
Potential Price Risks for the FLR Token
Despite the recent price surge, Flare’s recovery road may be faced with several potential risks. The principal risk emerges from data showing that the weighted funding rate has persisted in the red over recent days.
A continuous negative funding rate implies that holders of short positions are compensating long holders, culminating in a high short interest. Such a scenario invariably signals traders’ anticipation of a future price that is lower than the extant one.
Another red-flag is that Flare’s ecosystem hasn’t been performing well despite the ongoing rally in the crypto market. For instance, Tether – a stablecoin indexed to the US dollar – has seen its supply in the network decline by 23% in the preceding 30 days, reducing it to $64 million. Concurrently, the USD Coin supply also experienced a drastic 30% drop to $18 million.
The decentralized exchange volume of Flares has followed a similar trajectory, remaining in a downtrend over the preceding couple of months. The volume currently stands at $91 million, a decline from $122 million and $167 million in June and May respectively.
Technical Analysis of the Flare Crypto Price
The Flare token’s daily chart exhibits a strong price surge over the previous days. This spike follows the formation of a falling wedge pattern, a common bullish reversal indicator comprising two descending, converging trend lines.
The Flare crypto price also formed a ‘golden cross,’ a situation where the 200-day and 50-day weighted moving averages intersect, which accounts for the recent price surge.
Both the Relative Strength Index and the Stochastic Oscillator have moved into the overbought level, suggesting a likely short-term pullback to the psychological $0.20 point before the uptrend resumes.
