In the realm of cryptocurrency, momentum can build so quickly that it almost staggers one, and this week has proved no exception with the token $LPT (Livepeer).
Following a recent announcement by Upbit Global, one of South Korea’s top cryptocurrency exchanges, $LPT had been on a moonshot trajectory toward hitting a new all-time high… only to then retrace almost completely in a matter of hours. The rapidity of both the rise and the retrace calls to mind the expression that what goes up must come down, but with trading action so lively, one has to wonder what forces are at work carcassing Livepeer and its token near the top of traders’ trees.
Price action around $LPT shows how quickly the market can react to the listing of a new exchange and how intensely it can speculate in the short term around the new trading pair. With funding rates on Binance futures for $LPT now at a record low, it’s clear that traders are pricing in a pretty significant probability that $LPT is about to work its way down the chart more.
Upbit Listing Sparks Massive Rally
The price of $LPT began to surge right after Upbit Global officially stated it would be listing the token on its platform. Listing on a large exchange, such as Upbit, which has a strong retail presence, usually acts as a catalyst for a token’s price to increase, owing to various reasons, such as increased visibility and confidence in the token.
The news of the listing set off a flurry of trading activity in the hours immediately after. Traders rushed in, pushing the price of $LPT up some 80% to about $10.80. The much-anticipated moment when $LPT appeared on the exchange was accompanied by some serious trading. No buzz on social media could match the intensity of the trading volume at that moment. It was a new day for $LPT — and for the people who trade it.
Nevertheless, as frequently occurs with such parabolic advances, the upswing was not sustainable. Merely one day subsequent to achieving its zenith, the cryptocurrency commenced its descent as the profit-taking set in and the futures markets became progressively more bearish.
Binance Futures Signal Mounting Bearish Pressure
A market’s changing sentiment is most clearly reflected in the funding rate for $LPT on Binance Futures. Funding rates reflect the cost of holding long or short positions in the perpetual futures contracts and often serve as an indicator of where the market thinks it is going.
Right now, the rate at which $LPT is funded has shrunk to -2%, and it has a 1-hour settlement cycle, which is a drop to a bearish signal. A negative funding rate right now means that short sellers are paying a lot to maintain their positions. That, in turn, means that traders feel strongly and with high conviction that the price of $LPT is going to keep dropping in the short term.
That the settlement cycle is set to just one hour also speaks to high market activity and short-term volatility, as exchanges try to manage risk and recalibrate positions often.
This aggressive short selling pushes the price down and carries the potential to push it down even further unless buyers take over again or new positive news comes out.
Other Tokens Show Signs of High Volatility
$LPT is not alone in confronting stormy weather. Other altcoins, like $ZEN (Horizen) and $NMR (Numeraire), are exhibiting the same signs of extreme volatility on Binance futures. Yet, unlike $LPT, these tokens are not linked to any specific announcement. Still, large price swings and fluctuating funding rates in $ZEN and $NMR suggest that traders are using these assets for short-term bets—speculating with them, in other words—while the broader market is uncertain.
These altcoins’ increasing volatility may reflect instability of a macro sort or simply our present nervousness about market valuations. In any case, with the flagship cryptos seeming to have settled into relatively narrow trading ranges for the time being, more and more traders appear to be looking toward lesser-known tokens as the next big opportunity, which is causing sharp upward and downward movements in many of these coins.
This pattern spotlights the perils and payoffs of investing in smaller-cap stocks in aggressive market conditions. The initial 84% surge in $LPT was certainly seductive, but like many recent crypto gains, it ended with a stiff correction.
Dramatic price swings of $LPT post its Upbit listing show just how speculative the crypto market is.
Where else can one find news-driven surges quickly devolving into steep pullbacks?
At this point, the token seems to be testing any resilience it has.
At present, $LPT market players will closely monitor whether the asset can find stable footing above its recent lows. If not, there are those who would bet, on the basis of past performances, that the altcoin has more room to fall. At the same time, the sharp uptick in $ZEN and $NMR altcoin volatility underscores an altcoin sector that is primed for profit-taking — or, conversely, for those who believe in Bitcoin, for buying dip opportunities.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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