Cap [CAP], the native token for the blockchain credit-backed platform, has pulled impressive numbers over the past day. At press time, its market capitalization crossed over $100 million, while its price traded at $0.06 following a 38% increase within this period.
AMBCrypto observed that much of this growth can be attributed to a sentiment-driven rally in the market. Notably, Mindshare and sentiment for the asset have both increased significantly over the last day.
The Sentiment, most particularly, which is an indicator that tracks the extent of the bullish or bearish outlook investors hold using a scale between -10 and 10, has a reading of 4.27, suggesting that the market is bullish at the time being.
Likewise, there has been noticeable growth in the Mindshare, which represents the amount of discussion among traders about the asset. CoinMarketCap put the number at over 679% to 984 in the past 24 hours alone.
Growth in the Sentiment alongside Mindshare often impacts price positively, in a way that contributes to the overall interest among investors holding the asset in the near term.
On-chain capital flow is not a strong bull case
The contribution to the rally through on-chain flow has remained largely minimal, according to data from DeFiLlama.
In the past 48 hours, the Total Value Locked, which tracks the amount of the asset deposited into the protocol, had grown slightly by $10 million, bringing its value to about $330 million at the time of writing.
While the growth is moderate and tells that investors are bullish, it is not quite at a level that is often associated with a rally that trends across multiple trading sessions in the market.
The fees and Active Loans, although positive, have remained minimal. The total fees generated by the protocol in the past 24 hours reached just $11,758, while the Active Loans stood at $61.55 million at press time.
The Active Loans, for instance, represent a slight decline from the $67.86 million recorded on the 12th of September, while the Fees generated show a massive gap from the $44,130 recorded on the same day. The clear decline often suggests fewer active users of
the protocol, a trend that ultimately impacts the asset’s utility eventually.
The risk of a decline remains
The risk of a decline persists as the flow of capital across the spot and perpetual markets has shown weakness.
Data from CoinGlass shows that the OI-Weighted Funding Rate for CAP had plummeted into negative territory and has a reading of about -0.4748%.
A negative Funding Rate implies that traders are concentrating more of their capital into shorting the asset, meaning they anticipate that the asset is likely to trade lower on the chart in the near term.
In the same vein, there has been a heightened sell-off in the spot market at the same time, with the Spot Market Netflow dropping to around $2.20 million in the past 24 hours in the market, following $9.78 million.
Continued selling in the market would continue to weigh on the price, causing it to underperform in the near term. For now, the risk of a decline is still on the high side, especially when the Sentiment fades.
Final Summary
CAP gained 38% as its Market Capitalization crossed $100 million, while Sentiment and Mindshare rose sharply.
Weak on-chain flows, falling Spot Market Netflow, and a negative Funding Rate keep the risk of a decline elevated.