Pendle [PENDLE] was down nearly 10% over the past 24 hours, with traders collectively recording significant losses at press time.
Multiple factors have driven the market’s weakness, including perpetual capital flows and declining on-chain activity. However, there’s one factor of hope: that the decline could be a potential stop hunt, and a rebound isn’t off the table yet.
PENDLE faces heavy selling pressure
The scale of the bearish pressure in the market has become noticeable, given the gap in the liquidated capital over the past 24 hours.
Within this period, long positions have lost roughly $261,000, while short positions in the market have lost $9,660. This implies that longs have lost 27 times more than shorts had lost, meaning that for every $1 lost by longs, shorts lost $27.
This happens in conditions when the market is extremely bearish, as the momentum continues to go in the sellers’ favor.
The Whale Retail Delta, a tool used to assess whether whales or retail traders have been the most active participants in the market, confirms the former to be taking the lead role.
Whales control large amounts of an asset, and their activity during a price decline suggests they are responding to the market conditions.
On-chain activity continues to decline
There has been an accompanying decline in on-chain activity as the price plummeted. Since the 25th of September, data from DeFiLlama reports that the transaction count and Active Addresses have both declined.
At the time of writing, the transaction count had fallen from 1,246 to roughly 667 at the latest count. That’s nearly a 46% decline recorded within this period. Likewise, the number of Active Addresses fell from 651 to roughly 387 at the time of writing, representing a decline of roughly 40.5%.
When there’s a massive decline of this scale, it often implies that there’s a significant drop in the protocol’s utility, which puts the asset’s performance at risk.
Why bulls still have hope
The struggling state of the market hasn’t particularly phased out the bulls from the market. Notably, the Funding Rate, which has a reading of 0.0032%, suggests that investors are still bullish.
When the Funding Rate is positive, it implies that traders are positioning for a rally. The massive liquidation gap and whale presence could suggest that the current decline is a stop hunt.
A stop hunt is a move where investors drive the price of an asset to trigger stop losses before moving in the opposite direction. If this should be the case with PENDLE, then it implies the price could see a rebound soon.
Final Summary
- PENDLE has faced heavy bearish pressure, with long positions losing 27 times more capital than short positions over the past 24 hours.
- Despite weakening on-chain activity, a positive Funding Rate and whale activity leave room for a potential PENDLE rebound.
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