DASH Soars 12% – Yet Warning Signals Suggest a Potential Price Drop

DASH has experienced a remarkable 12% surge over the past day due to increased capital inflows. However, emerging market indicators warn of possible bearish trends, prompting caution among investors.

Key Takeaways

Privacy tokens are seeing positive trends, with DASH being among the leaders, up 12% recently.
The surge in DASH’s price is mainly driven by capital inflows from retail investors and a significant acquisition.
Despite good news, underlying market signals, like the balance of power and funding rates, indicate potential bearish pressure.

DASH jumps 12% on inflows, but BoP divergence and funding data flash warning signs

Why is DASH Rising Today?

The main reason for DASH’s recent price increase is a notable capital inflow. This surge in liquidity has primarily come from retail investors in the spot market, which has notably reduced exchange reserves.

The rally began with a substantial acquisition of DASH amounting to $2.69 million. This transaction was characterized by a distinct pattern: the tokens were quickly transferred to private wallets.

Dash spot exchange netflow. Source: CoinGlass

The migration of assets from centralized exchanges to private wallets suggests that investors are adopting a more optimistic long-term outlook. This week alone, total purchases from retail investors reached $5.62 million, reflecting a robust wave of bullish activity. The derivatives market echoed this trend, with open interest rising by 26%, leading to an influx of about $20.58 million in fresh capital.

Not All Capital Inflows are Positive

Despite the apparent bullish trends, the inflow from the derivatives market may also signal caution. Analysis reveals that a significant portion of these inflows comes from investors betting against DASH.

Market analysts assess this using the weighted average of the Funding Rate, which indicates whether short or long positions dominate fee payments, alongside Open Interest (OI). Currently, this metric stands at 0.8088%. A negative reading suggests that the majority of capital is aligned against a price rally, with short positions prevailing.

Dash spot exchange netflow. Source: CoinGlass

This scenario raises concerns because the OI-Weighted Funding Rate has retreated to levels last seen on November 16. This period was followed by a sharp 49% decline in DASH’s price, which plummeted from $104 to $52. If the cycle repeats, DASH might drop from its current price of $64.77 to approximately $31.7, a level not visited since October 10.

What Lies Ahead for DASH?

The future trajectory of DASH remains uncertain, but current market data suggests the potential for a bearish divergence. This analysis draws on the Balance of Power (BoP), a momentum indicator that assesses the strength of buyers versus sellers by comparing opening and closing prices.

As of now, the BoP is trending downward while the price continues its upward path, indicating a bearish divergence.

DASH technical indicators. Source: TradingView

Supporting this view, the Aroon indicator shows that Aroon Down (blue) remains above Aroon Up (orange), suggesting continued bearish sentiment. However, the distance between these two lines is still narrow.

Given these market factors, investors should approach the upcoming trading sessions with caution.