Jupiter Price Decline – Can $26M in Q4 Holder Income Aid JUP’s Recovery?

A significant sell-off by major investors resulted in outflows of $128 million, leading to a sharp decrease in total value locked (TVL).
Despite current bearish trends, rising token holder income and liquidity clusters indicate the potential for a bullish reversal.
Jupiter (JUP) faced a major downturn, similar to other assets, as the total cryptocurrency market cap fell to $3.2 trillion.
Analysis shows that the 15% price drop of JUP and increasing bearish sentiment are not the only factors, with bullish indicators also appearing.

Key Takeaways

A significant sell-off by major investors resulted in outflows of $128 million, leading to a sharp decrease in total value locked (TVL).
Despite current bearish trends, rising token holder income and liquidity clusters indicate the potential for a bullish reversal.
Jupiter (JUP) faced a major downturn, similar to other assets, as the total cryptocurrency market cap fell to $3.2 trillion.
Analysis shows that the 15% price drop of JUP and increasing bearish sentiment are not the only factors, with bullish indicators also appearing.

JUP faces heavy sell-off as TVL crashes

Massive Sell-off Pushes JUP Lower

The recent drop in JUP's price was primarily caused by a significant sell-off from long-term investors. According to DeFiLlama, approximately $128 million in outflows led to a decrease in its Total Value Locked (TVL), which now stands at $2.92 billion as of this writing. This significant fall in TVL indicates that investor confidence in the token's long-term value and the benefits of staking in its liquidity pools is waning.

JUP OI weighted funding rate

Source: CoinGlass

The derivatives market also experienced similar negative trends, with the Open Interest Weighted Funding Rate dipping into negative territory at -0.0203%. This decline implies that sell contracts are now more prevalent than buy contracts within the same timeframe. Therefore, ongoing funding favoring sellers over buyers suggests that JUP may continue to experience downward pressure, particularly if more investors choose to unlock their assets.

Spot Buying Supports JUP

Quarterly reports reveal that JUP's Token Holder Net Income for the third quarter has surpassed that of both the first and second quarters. As of the latest update, the total income for this group reached $26.33 million, closely following the third quarter’s impressive $51.94 million. The increase in holder income, occurring just 45 days into the fourth quarter, raises the possibility that investors who previously exited may rethink their approach, potentially re-entering the market for long-term gains.

JUP spot exchange netflow

Source: CoinGlass

In the spot market, trading patterns indicate that retail investors are capitalizing on the recent price decline. CoinGlass data indicates that approximately $312,000 has been spent on purchasing JUP. While this amount is relatively modest and suggests caution among investors, it may indicate a willingness to increase buying once market sentiment shows signs of recovery.

Bullish Setup Remains in Place

The liquidation heatmap reveals that there is still potential for a market rally. This expectation is based on the limited clusters of liquidity, which could lead to price movements in their favor, even if not on a large scale.

JUP liquidation heatmap.

Source: CoinGlass

From current levels, JUP may be positioned to attempt an upward move on the price chart, supported by several liquidity clusters. The largest cluster is located around $0.35, albeit with relatively low liquidity at that level. However, current market structure indicates a strong inclination for JUP to strive for an upward trajectory.