RIVER saw gains of 11% over the past day as capital inflows increased, specifically driven by activity in the perpetual market.
One notable aspect of this recent surge, however, was that it carried a significant risk of a bull trap. Especially since the conditions underlying the recovery have not formed in a fully bullish scenario.
Perpetual inflows make RIVER rise higher
The surge in River (RIVER) marks a notable turnaround for investors who have largely offloaded the asset.
This week was dominated by significant selling pressure, with $1.94 million in net sales recorded – meaning sales volume exceeded buying volume in the spot market.
The reversal that has since pushed RIVER higher came from capital inflows into the perpetual segment of the market. This indicates that the purchasing activity of this cohort supported price action at press time.
Open interest increased 3% over the past day, reaching around $76 million at the time of writing.
The funding rate also turned positive, implying that new capital entering the market was concentrated on the long side of contracts.
And yet, despite everything, the risk seemed high in the market. Especially since the data indicates a strong tendency towards a withdrawal from this phase.
Binance Long/Short Ratio Hits 2.24
Volume data on the perpetual market revealed a divide between Binance traders and the broader market.
Binance traders continued to trade more call volumes on the RIVER Perpetual Market, with the long/short ratio on the platform reaching 2.26 at the time of writing. This is against RIVER’s total perpetual volume of $50.70 million.
A long/short ratio above 1 indicates that buying volume is dominant, and the higher the reading is above 1, the greater the concentration of buying in the market.
The broader RIVER perpetual market told a different story, however, with the overall long/short ratio falling below 1 to 0.97. This indicates that the sales volume has been dominant on other exchanges.
This split between Binance and the rest of the market appears to add to the risk profile of the ongoing rally.
Bull and Bear Power Shows Minimal Buying Pressure
Finally, market analysis warned that momentum has yet to peak in favor of the bulls, with the bears having a higher probability of taking control.
The Bull and Bear Power indicator shows whether buyers or sellers are leading the market through histogram bar formations. At press time, buyers appeared to be showing clear signs of limited engagement.
The chart revealed only a very small green bar, suggesting that purchasing power in the market has been minimal and the likelihood of a sustainable recovery may be low.
The Relative Strength Index also reinforced this reading, remaining in negative territory while continuing its southward trend.
A falling RSI generally hints at the buildup of selling pressure, putting RIVER at significant risk of reversal from its high levels.
Final Summary
- RIVER’s latest push came as a surprise to those divesting the asset.
- Perpetual inflows have been key to RIVER’s recent performance.
