Floki Inu (FLOKI), a memecoin inspired by the Shiba Inu, has stepped into the spotlight with an increase in trading activity and a nearly 20% price increase in the past week. However, experts warn that these “minis” may be short-lived, fueled more by hype than solid fundamentals.
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Open interest takes off: Newcomers flock to FLOKI
The main indicator driving the excitement is the surge in open FLOKI futures. According to Coinglass, this number, which reflects the number of futures contracts outstanding, has risen a staggering 110% since May 1, reaching a 30-day high of nearly $20 million. This indicates a higher number of new market participants entering FLOKI positions, which may anticipate further price increases.
To make matters worse, FLOKI's daily trading volume skyrocketed. On May 15, saint It recorded daily volume exceeding $1 billion, the highest level for FLOKI since late March. This intense buying activity indicates increased investor interest, pushing the price higher.
Momentum indicators indicate an uptrend
The bullish FLOKI case is reinforced by the behavior of the main momentum indicators. Both the Relative Strength Index (RSI) and Money Flow Index (MFI) are currently comfortably above their neutral lines, at 62.68 and 65.37, respectively. In simpler terms, these metrics indicate that price momentum is leaning towards more gains in the short term.
The broader market sentiment surrounding FLOKI is also remarkably positive. Increased trading volumes and increased mentions on social media have increased investor interest, indicating that the cryptocurrency is gaining traction not only among retail traders but also among institutional investors.
Recent partnerships and strategic developments within FLOKI The ecosystem is likely to lead to further growth. These factors, combined with strong technical indicators, paint a promising picture for FLOKI's near-term performance, which could pave the way for a significant price rally.
However, beneath the shiny exterior lies a potential cause for concern. The Chaikin Money Flow (CMF), an indicator that measures the buying and selling pressure of an asset, paints a somewhat bearish picture.
It is still in negative territory
Despite the price rise, FLOKI's CMF remains firmly in negative territory, currently hovering around -0.11. This suggests that despite the rise in price, buying pressure may be weakening.
This divergence 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 undoubtedly impressive, fundamentals point to a potentially volatile future. The rise in open interest and trading volume indicates market madness, but negative CMF raises concerns about the sustainability of the rally.
Featured image from Floki, chart from TradingView
