Iota, an open source distributed ledger focused on the Internet of Things (IoT), saw its Iota token rise 43% on November 29 after announcing the establishment of the Iota Ecosystem DLT Foundation and registration in the capital city of Abu Dhabi. . United Arab Emirates. This makes Iota the first regulated distributed ledger technology foundation for the Abu Dhabi Global Market.
According to the project’s press release, the foundation plans to seed $100 million in IOTA tokens that will be awarded over four years. Traders clearly saw this announcement and funding plan as a near-term bullish catalyst.
Historically, ecosystem and developer incentives by blockchain and DeFi protocols tend to attract liquidity to projects and increase sentiment among market participants.
In August 2021, Avalanche’s AVAX (AVAX) token fell 1,400% following the announcement of the Avalanche Rush decentralized finance (DeFi) incentive program.
Similar results have been seen for Trader Joe’s JOE token in the months since December 2022, after the DeFi protocol announced plans to enter Arbitrum.
Currently, the Arbitrum ecosystem hosts liquidity and developer incentives, and these initiatives coincide with the recent 62% resurgence in the ARB token price.
Was IOTA’s price change another popular event?
On November 30, cryptocurrency derivatives data provider Coinalyze tweeted the following IOTA chart, noting that IOTA’s “funding rate and long/short ratio” were at “historic lows.”
Funding rate and long/short ratio are at an all-time low! pic.twitter.com/wloZNoLMxu
— Coin Analysis (@coinalyzetool) November 30, 2023
Traders often interpret funding rates and bid/ask ratios as sentiment gauges and indicators of active investor positions. In this context, traders perceive low funding rates to reflect crowded short positions, and in these situations, positive news or price events can quickly promote a rapid price reversal that pushes short traders out of their positions.
Comparing Coinalyze’s chart to the standard candlestick daily chart, it appears to reflect these dynamics, especially the large buying candle on November 29th.
In addition to the most recent price breakout, the IOTA price has been trading at multi-year lows and the weekly charts reflect a degree of apathy towards the project from a trader’s perspective.
Cryptocurrencies have a long history of witnessing price surges leading to mainnet upgrades, multichain expansions, funding announcements, and developer incentives. Only time will tell if this is the case for IOTA.
This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.