BONK is facing bearish concerns due to excessive short positions! Will Bonk prices fail to maintain recent highs?
Solana-based meme token BONK strengthened its position in the market by ranking 69th on CoinGecko’s list of most valuable digital currencies, marking a significant milestone with its market capitalization exceeding $1 billion for the first time. Bears are now selling the meme coin heavily as Bonk has witnessed a skyrocketing surge over the past few hours, raising concerns of an immediate decline.
Bonk’s funding rate becomes negative
Bonk (BONK) has increased its value by a massive 1,200% in one month, pushing its market capitalization past $2 billion. This surge is believed to be partly due to its association with the well-performing Solana. Additionally, the momentum of meme coins was likely fueled by Coinbase’s announcement that it would include BONK in its future plans and list it on its platform.
According to Coinglass, Bonk’s recent surge resulted in a massive liquidation worth nearly $1.6 million. However, the recent surge is now at risk of being halted as bears open more and more short positions near the peak.
Traders are showing a bearish trend as this meme coin faces near resistance in the perpetual futures market linked to Bonk. According to Coinglass, the open interest rate and volume-weighted funding rate for perpetual futures have decreased to -1.5%. This means that selling positions that benefit from falling prices are dominant.
Traders holding these positions are prepared to pay traders holding long positions to maintain their bets on a price decline. Bonk is currently experiencing severe short selling. However, this increases the likelihood of a short squeeze.
A short squeeze occurs when the price suddenly rises due to the liquidation of bearish positions. This typically requires unusually high levels of bearish activity, as currently seen with Bonk perpetual futures. In this scenario, short sellers can quickly cover their positions even if the price rises slightly. This action could create a bullish effect and push prices higher.
What’s next for Bonk Price?
Bonk price faced resistance at $0.000035 as bears aggressively defended the surge and moved lower towards the 23.6% Fib channel. However, buyers are aiming to buy near the current decline. At the time of writing, Bonk price is trading at $0.0000278, a surge of over 92% from yesterday’s price.
If there is a significant recovery from the 20-day EMA, this indicates that traders are actively buying during price declines. Afterwards, the bulls may try to break above the $0.000035 level again. A successful breach could send the price to another high.
Conversely, if the price continues to decline and falls below the 20-day EMA, this bullish scenario could be invalidated. With RSI hovering in overbought territory, short sellers are gaining confidence in a correction. This move could push the price down to the $0.0000123 breakout point. However, buying pressure may increase at this level.