Floki Inu (FLOKI), a memecoin inspired by the Shiba Inu, gained attention last week with a surge in trading activity and a nearly 20% price increase. But experts warn that this “personality” may be short-lived, fueled more by hype than by a strong foundation.
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Open Interest Begins: Newcomers flock to FLOKI
A key indicator of interest is FLOKI’s surging futures open interest. This figure, which reflects the number of outstanding futures contracts, has increased by a whopping 110% since May 1, reaching a 30-day high of nearly $20 million, according to Coinglass. This means a surge in new market participants entering FLOKI positions and potentially further price increases.
Adding fuel to the fire is the significant increase in daily trading volume for FLOKI. On May 15, Santiment reported daily trading volume exceeding $1 billion, marking FLOKI’s highest level since late March. This intense buying activity indicates a surge in investor interest, pushing the price higher.
Momentum indicators indicate bullishness.
Further supporting FLOKI’s strength is the behavior of its key momentum indicators. The Relative Strength Index (RSI) and Money Flow Index (MFI) are currently comfortably above the neutral line at 62.68 and 65.37 respectively. Simply put, these indicators suggest that price momentum is leaning towards further upside in the near term.
Additionally, the broader market sentiment surrounding FLOKI is particularly positive. Increased trading volume and a surge in social media mentions have fueled investor interest, suggesting the cryptocurrency is gaining traction among institutional investors as well as retail traders.
Recent partnerships and strategic developments within the FLOKI ecosystem are likely to fuel further growth. These factors, combined with strong technical indicators, paint a promising picture for FLOKI’s near-term performance, potentially paving the way for significant price appreciation.
But behind the shiny exterior there is a potential cause for concern. Chaikin Money Flow (CMF), a measure of buying and selling pressure on assets, is showing a slight downward trend.
Still in the negative zone
Despite the price rise, FLOKI’s CMF remains firmly in negative territory, currently hovering around -0.11. This means that even if prices rise, buying momentum may weaken.
This difference between price and buying pressure is often seen as a sign of a potential reversal, indicating a rally driven by short-term speculation rather than long-term investor confidence.
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While FLOKI’s recent performance is undeniably impressive, fundamental factors point to a potentially unstable future. A surge in open interest and volume suggests market enthusiasm, but a negative CMF raises concerns about the sustainability of the rally.
Featured image by Floki, chart by TradingView
Source: NewsBTC.com