US President-elect Donald Trump’s TRUMP token has made a splash in the crypto market, quickly becoming the 21st digital asset with a market cap of $11 billion in just two days.
The TRUMP/USDT pair became the most traded pair in the last 24 hours on major exchange Binance, accounting for 13.3% of total trading volume, according to Coingecko.
While this activity is exciting, bulls and those looking to join the market ahead of Donald Trump’s inauguration may want to exercise caution as a key derivatives market indicator has deviated bearishly from the increasing futures open interest of the token.
Open interest in TRUMP perpetual futures rose 6% over the past 24 hours, according to data source Velo Data. Even though prices have fallen from $70 to $58 since Asian hours, they are still up 3%.
However, the cumulative volume delta of perpetual futures, which reflects the difference between buying volume and selling volume, decreased by more than 1%, indicating a relative increase in selling volume. In other words, traders take short or bearish positions or close long positions.
Additionally, the TRUMP market appears overheated, with those holding long positions paying annualized funding fees of over 170% to shorts to keep their positions open. If the market stops recovering, holding long positions will become a burden, which could cause bullish bets to unwind. This, in turn, could cause prices to fall further.
The chart shows that most major cryptocurrencies have seen a net sell-off in perpetual futures over the past 24 hours. Perhaps market participants fear market-wide price losses in a classic “sell the fact” action following Trump’s inauguration.
