Aptos: Three Factors That May Trigger APT's Short Squeeze to $3

Aptos [APT] is experiencing notable pressure in its price, dropping below the $3 support level despite increased on-chain activity. An analysis reveals three key factors that could potentially lead to a short squeeze, pushing the price back up.

Key Takeaways

The APT token faced over $6.5 million in short liquidations and low buying interest, causing it to fall below the $3 support level.
Maintaining activity above 1.7 million Active Addresses, along with a breakout past $3, could pave the way for reaching $4.
Despite a 27% decline this month, Aptos's on-chain activity remains robust.

Aptos [APT]

Increased Network Activity, But Price Declines

Aptos blockchain has seen a remarkable increase in monthly Active Addresses, more than doubling from about 750K to over 1.8 million, stabilizing around 1.7 million. This significant growth illustrates rising network utilization and a 62% surge in perpetual trading, according to data from DefiLlama.

APT Aptos

Source: Nansen AI

Despite this increase in activity, the price of APT has not responded positively, with the Total Value Locked (TVL) in the network remaining around $1 billion, still below prior peaks.

Understanding APT's Price Weakness

APT's price closely mirrored the overall market downturn, spurred by a $2.10 billion liquidation wave that sharply affected Bitcoin [BTC]. The token fell below a descending wedge formation early in November, confirming bearish sentiment.

Technically, APT's price slid from approximately $3.06 to $2.60, amounting to a 27.6% decrease. The Cumulative Volume Delta (CVD) indicated a mildly positive $227.43K, suggesting weak buying activity. Meanwhile, the Moving Average Convergence Divergence (MACD) indicated a reduction in selling momentum, although market responses from both buyers and sellers remained subdued.

aptos APT

Source: TradingView

If APT manages to reclaim the $3 level, the decline could see a pause. A successful breakout above $4 may shift market sentiment positively. Until that occurs, the token appears to be trapped in a downward trend on the 4-hour chart.

The Derivatives market also reflected the reasons behind this decline, showing over $6.54 million worth of leveraged shorts across all APT/USD trading pairs. This selling pressure was somewhat countered by $3.81 million in cumulative long positions, which is half the volume of the shorts.

Source: CoinGlass

The highest concentration of short liquidations occurred on Binance, amounting to $1.56 million at $2.79, according to data from CoinGlass. Thus, how will liquidity affect APT's next price moves?

Liquidity Levels Above $2.80

According to the Liquidation Heatmap, there was a significant cluster of liquidity at the upper levels of the recent price action, especially in the $2.80 range, with cumulative orders exceeding $1 million. This setup indicates a higher likelihood of price moving upward if liquidity becomes a target.

APT

Source: CoinGlass

Conversely, areas below $2.60 experienced less liquidity concentration, which could suggest a potential pause before further declines.

In conclusion, while APT's price movement seems weak, signs of buying interest are emerging. However, the general market sentiment remains bearish until resistance levels can be converted into support.