Will Aster’s Buyback Strategy Regain Market Confidence After a 57% Drop?

Will Aster’s buybacks reverse the token’s 57% pullback?

Aster has recently implemented a new token buyback plan in an effort to rejuvenate market sentiment after a significant price correction. Despite this initiative, investor enthusiasm appears muted, with some questioning the effectiveness of the buyback approach.

Key Takeaways

The market is attempting to find stability at the $1 mark, suggesting a potential recovery if overall market sentiment improves.
Current spot market activity remains flat and has not yet gained sufficient momentum to confirm the buyback as a significant catalyst.
Aster announced another round of buybacks, but market reaction has been tepid.
On October 29, YZi Labs, the backer of Aster’s perpetual DEX, declared that it would allocate up to 80% of trading fees towards this buyback initiative.

Aster

Source: X

The initial buyback drive occurred approximately two weeks prior, on October 10th, when Aster purchased 100,000,000 ASTER tokens. However, this coincided with a flash crash that wiped out over $19 billion from the market, making it hard to assess ASTER’s past price behavior based on that event.

What Lies Ahead for Aster’s Price?

Despite the announcement, enthusiasm around the buyback has waned. One critic even remarked, "They might have meant to say sellback, not buyback," expressing a preference for burning the tokens instead of merely storing them for future selling.

Currently, ASTER has fallen around 2.5%, likely influenced by the cautious mood surrounding the FOMC meeting. Overall, the token has plummeted nearly 60% from its peak price of $2.4, currently trading around $0.90.

ASTER

Source: ASTER/USDT, TradingView

While traders are attempting to establish the $1 level as a support area, technical indicators are still displaying bearish signals. The On Balance Volume (OBV) has decreased and remains stagnant, failing to indicate any meaningful recovery potential. Additionally, the Relative Strength Index (RSI) on the 12-hour chart has consistently stayed below the average level since October 10th, showing that short sellers currently have an advantage.

A Calm Before Potential Volatility?

On the supply and demand front, Arkham data indicates a neutral market with low buying and selling activity. This contrasts sharply with the increased flows into on-chain exchanges observed in late August and early October, as recent activity has slowed significantly.

This suggests that while more tokens moved onto on-chain exchanges, the momentum has diminished, resulting in a sideways market. On-Chain Exchange Flows show that the spot market remains neutral to bullish.

Aster

Source: Arkham

On the derivatives side, leveraged traders remain unexpectedly optimistic. In the past 24 hours, they have only slightly reduced their long positions by 1%, likely as a precaution against the FOMC meeting. In fact, long positions have accounted for an impressive 77%, marking a significant increase in just five days. This suggests that while leveraged traders are bullish, the spot market still needs to show positive signs to facilitate a sustained recovery.

Aster

Source: Coinglass