Key takeaways
What caused Double Zero to fall 17% despite positive listing news?
Low liquidity and increasing selling pressure in the derivatives market triggered this sharp decline.
Is there potential for a 2Z rebound?
Yes, strong spot buying and a positive funding rate suggest renewed bullish sentiment and a possible recovery.
At the time of writing, Double zero (2Z) saw a 17% decline over the past day, a move that came as a shock to investors after the asset regained a positive outlook thanks to its potential listing on Coinbase.
The largest US exchange reportedly plans to add the cryptocurrency to its listing roadmap after receiving a no-action letter from the Securities and Exchange Commission (SEC).
This is largely attributed to the decline in value for perpetual investors, which is driving market activity. Whether this marks the start of a major slowdown remains to be seen.
Low liquidity hits the market
Low liquidity circulating in the derivatives market played a key role in the fall of 2Z over the past day.
Data from CoinGlass shows that Open Interest (OI) saw an outflow of $7.3 million, at press time, bringing it down to $46.5 million.
This capital outflow, alongside falling prices, indicates that investors are increasingly worried and that the asset could face a deeper downturn.
Source: CoinGlass
However, the momentum accelerated sharply, reaching a high of $297 million on the last day. This shows that the recent decline is strongly supported by volatility, which could obscure any potential near-term rebound.
Likewise, the Taker Buy/Sell Ratio shows that sellers are dominating, with a reading of 0.95 on the chart, implying that selling pressure remains high.
Is it over for 2Z?
A deeper analysis of the market shows that there is still room for a rebound.
The funding rate, for context, shows that long investors are currently paying the most in funding fees because they anticipate the market will move in their favor.
Source: Coinglass
The Open Interest Weighted Funding Rate shows that long positions control most of the liquidity still circulating in the derivatives market.
The OI-weighted positive funding rate on the chart indicates that the recent fallout has likely driven away investors on paper.
This change offers new prospects for a possible price recovery in the coming days. Greater convergence is beginning to surface in the market.
Cash purchases are growing
Spot trading activity has increased significantly in recent hours. On October 9, the asset recorded its highest spot purchases yet, totaling $8.7 million.
Interestingly, the accumulation in the spot market is greater than the total sales recorded in the derivatives market, a difference of approximately $1.4 million.
Source: CoinGlass
Typically, derivative contract closings exceed spot purchases. However, this time the higher spot volume indicates that the sell-off might only be temporary.
With this growing spot interest and changing market sentiment, it is likely that 2Z could stage an upward rally soon.
