FET Grows 11% as Bulls Stand Firm, but Warning Signs Emerge

FET Grows 11% as Bulls Stand Firm, but Warning Signs Emerge

Fetch.ai (FET) has experienced an impressive 11% price increase recently, signaling bullish momentum. However, there are warning signs on the horizon, particularly related to liquidity clusters that could indicate a potential price drop.

Key Takeaways

Fetch.ai (FET) has gained 11% in the last day.
Despite the price rise, there are liquidity clusters signaling a possible decline.
Retail investors are reducing their exposure to FET.
On-chain metrics suggest a medium-term bullish outlook but may indicate bearish risks.
Derivative markets show strong bullish sentiment, illustrated by rising open interest and positive funding rates.

FET Experiences Significant Price Movement

Fetch.ai's recent rise has brought its price closer to significant liquidity-cluster levels on the chart. These clusters can lead to rapid price declines, as they contain a high volume of sell orders waiting to be filled.

Liquidity clusters represent areas on the price chart where there are many unfilled orders. When the price reaches these levels, it tends to fulfill these orders, which can lead to a drop in price, especially if there is a concentration of sell orders above the current levels.

FET Liquidity Chart
Source: CoinGlass

These issues, combined with retail traders limiting their positions, suggest uncertainty in the market. Data from CoinGlass reveals that retail investors have started to decrease their exposure to FET. The accumulation of FET fell sharply from 24.1 million on October 6 to just $1.22 million on December 8.

FET Displays Slightly Bullish Indicators

Despite the concerns, on-chain indicators show that the market sentiment leans toward being bullish in the medium term. This relatively positive outlook indicates there may still be bearish sentiments lurking beneath the surface.

Valuation multiples lend credence to this observation. The ratio between FET's daily trading volume and its market capitalization has experienced a slight increase. This ratio reflects how actively a token is traded relative to its market value. Currently, a ratio of 0.2 suggests moderate trading activity and liquidity.

Artificial Superintelligence Alliance - Trading Volume Source: Artemis

In the last 24 hours, FET recorded a trading volume of $127.5 million, which is an 86% increase from the previous day. The market cap was reported at $596.4 million, according to CoinMarketCap. Additionally, bullish activity is noticeable in the derivative markets where long positions are staying robust.

Bulls Show Resilience in the Market

The derivatives market has seen one of its most significant inflows recently. Open interest rose by about 9% during early trading hours, adding approximately $6.37 million to the market.

This nearly 10% growth in total open interest emphasizes strong investor interest and readiness to buy into FET.

FET Open Interest Chart
Source: CoinGlass

Furthermore, the funding rate has remained positive at 0.0083%, indicating a slight prevalence of bullish sentiment over bearish. This generally suggests a favorable environment for ongoing price rallies.

As it stands, the market sentiment is relatively positive, but the next moves depend heavily on how the price interacts with the identified liquidity-cluster zone.

Conclusion

In summary, while Fetch.ai's (FET) recent price increase suggests bullish momentum, the potential risks indicated by liquidity clusters cannot be ignored. Investors should stay cautious and watchful as market dynamics evolve.