MEW Risks Pullback After Surge: What Investors Need to Know
Key Takeaways
cat in a dogs world [MEW] experienced a significant surge, jumping 22% to a 2-month high of $0.004 before slightly retracing to $0.0039. The memecoin now faces strong sell-side pressure amid increasing profit-taking activities.
cat in a dogs world [MEW] rallied by 22%, breaking out from a multi-month downtrend. This surge propelled MEW to a 2-month high of $0.00406 before a slight pullback to $0.0039.
During the same period, the trading volume saw a substantial increase of 522.9%, reaching $284 million. The market capitalization also rose to $349 million, marking an 18% increase.
Typically, rising volume and market cap indicate growing on-chain activity and capital inflow. But the critical question remains: Is this a speculative bubble or the beginning of a sustained uptrend?
Futures Market Impact on MEW's Rally
The positive sentiment in the broader crypto market has driven investors to bet on MEW's next move, significantly influencing its price.
Open Interest jumped by 57% to $48.36 million, while Derivatives Volume surged by 695% to $358 million. Such parallel increases reflect heightened participation in Futures trading.
Consequently, MEW’s Funding Rate increased to 0.0046, a notable shift from the previous day's negative rate, indicating a higher demand for long positions.
Long positions soared to 63.8%, while short positions accounted for 38% of total Futures accounts, suggesting that most investors are betting on further price increases.
Profit-Taking Activities
As cat in a dogs world surged, many investors who had been underwater took the opportunity to cash out. Capital flow analysis reveals a rush to realize profits.
MEW recorded two consecutive days of positive Exchange Netflow, according to CoinGlass. The Netflow was around $1.57 million, a $500k increase from the previous day.
Typically, positive Exchange Netflow indicates that investors are selling more than they are buying. This pattern is further confirmed by examining the Aggregated Spot Buy Sell Volume.
On July 16th, buyers dominated the market, acquiring 13.09 million tokens, which contributed to the memecoin's breakout.
However, on July 17th, the dynamics shifted, with sellers outpacing buyers. Sell Volume spiked to 31.36 million compared to the Buy Volume of 23.94 million.
This resulted in a negative Sell-Buy Delta of 7.42 million tokens, indicating strong selling pressure.
MEW at a Critical Juncture
MEW experienced a robust upswing driven by investors entering the futures market.
The memecoin’s Stochastic RSI of 92 is approaching overbought territory. Simultaneously, the Directional Movement Index (DMI) surged to 52, signaling strong upward momentum.
Rising momentum indicators often suggest the continuation of the current trend.
For the uptrend to persist, buyers need to regain control and displace sellers. Increased buying pressure could propel MEW to reclaim $0.004 and potentially target $0.448.
However, the risk of sell-side dominance remains significant. If profit-taking continues at the current rate, downward pressure will intensify, potentially causing MEW to drop to $0.0033.