KITE plunges 18% amid growing risk-off sentiment: More losses ahead?

With the broader crypto market retracing, $KITE posted one of the largest declines, ranking among the top losers. The altcoin extended its slip, breaching the $0.2 support and dropping to a low of $0.18 before slightly rebounding.

As of this writing, $KITE traded at $0.19, down 18.2% on the daily charts. Over the same period, its trading volume rose 112% to $81 million, suggesting increased sell-side activity.

$KITE traders adopt a risk-off stance

As Kite [$KITE] extended its decline, exacerbated by market-wide breakdown, investors in the Futures flipped bearish.

As a result, most market participants either scaled back or closed their positions entirely. CoinGlass data showed that $KITE’s Open Interest dropped 15.4% to $63 million, while Derivatives Volume rose 98% to $78 million.

Source: Coinglass

A drop in OI while volume rose suggested that traders aggressively closed their Futures positions. As such, there was increased market participation, but on the Futures side.

In fact, Futures Outflow rose to $27 million while inflow dropped to $23 million. As a result, Futures Netflow dropped 1018% to -$3.73 million.

Source: CoinGlass

As the market retraced, speculators panicked and exited, fearing further losses. Traditionally, if the market rallied on increased leverage and those positions closed, the market tended to decline.

Downside momentum strengthens; more losses?

With sentiment flipping bearish in Futures, $KITE’s downside momentum strengthened considerably.

The altcoin’s Relative Strength Index (RSI) fell sharply, dropping from 74 to 49 and entering the bearish zone. Such a drop suggests that $KITE faced intense selling pressure.

Source: TradingView

At the same time, the positive index (+DI) of the DMI dropped to 31, while the negative index (-DI) rose to 43. With ADX rising to 59, it indicated a strong downtrend.

With these momentum indicators set this way, it suggests bears have total control of the market, and $KITE could drop further. Therefore, if capital continues to flow out, the altcoin could lose its $0.18 support and drop to $0.16.

The Spot remains optimistic

As the altcoin dropped, Spot investors took the opportunity and continued to buy the dip. CoinGlass data showed that $6.74 million worth of $KITE flowed out of the exchanges, compared to $5.94 million in flow.

Source: CoinGlass

As a result, Spot Netflow dropped 25% to -$755k, extending a week-long trend. A negative Netflow suggests buyers remain active in the market.

Their presence gives the market hope for a potential recovery from the slip. If demand holds during this period, the altcoin will reclaim $0.20 and set a path for a significant rebound.

Final Summary

$KITE dropped 18%, breaching $0.20 support, hitting a low of $01.8.

Futures traders aggressively closed their positions, but Spot demand remains steady, offering the altcoin a chance to rebound.