From Coinpedia · By Sahana Vibhute
Story HighlightsNEAR Protocol faces continued selling pressure as weakening investor flows and market uncertainty weigh on investor sentiment
Traders are now watching whether market demand returns and Bitcoin stabalises, as these factors could influence NEAR’s next move
The NEAR Protocol price has drawn significant attention recently after smashing its yearly high at $6. Since then, the token has faced renewed selling pressure, attracting more than an 8% loss in the past 24 hours. The decline has brought the price closer to its pivotal support zone, putting its recent recovery at risk. As momentum weakens, investors are watching whether buyers can defend support or the rally will face the next local support below $4.
Why is the NEAR Protocol Price Falling?
The crypto markets have been experiencing significant downward pressure that has pushed the Bitcoin price below $80,000. This has pushed the NEAR price from $5.2 to levels below $4.2, with the latest candle breaking the support zone between $4.45 and $4.39. But what made the price drop below the crucial support? Here are the 3 main reasons that caused the fall.
The Global Risk-off Sentiment
The FED held interest rates at 3.75% to 4%, while maintaining a hawkish stance and highlighting concerns about rising inflation rates. This decision is believed to have rattled investors as they foresaw the possibility of a tighter monetary policy. On the other hand, the AI sector also experienced a strong correction, impacting AI- and big data-based tokens. Firstly, China’s AI and semiconductor stocks, the STAR 50 index, fell sharply by nearly 40% in less than four months, wiping out approximately $480 billion.
Alphabet’s earnings intensified concerns about heavy spending on AI that drove the company’s shares down, erasing nearly $400 billion. Meanwhile, the technology sell-off hurt the hedge funds across multiple strategies, with META dropping by 7%, Nvidia by 4%, and the Nasdaq Composite by 2.6%. Hence, this can be considered a crypto market sell-off on the whole, rather than a NEAR price correction.
Derivatives Deleveraging is Amplifying the Move
The NEAR Protocol open interest has reached a peak in recent times of $1.92 billion in the first fortnight of the month. However, the futures have experienced substantial position reductions since then, reaching levels around $1.33 billion.
The NEAR open interest has fallen around 9.5% in the past 24 hours, along with the price, which dropped below the pivotal support. Besides, significant long liquidations have been documented, which are believed to trigger a sell-off. This matters because when leveraged traders are forced to close long positions, their selling intensifies the downtrend.