In the past 24 hours, Kaspa [KAS] has experienced a 2.72% increase in value, with the digital currency trading at $0.1322. Nonetheless, market sentiment indicates a possible upcoming decline, continuing the losses seen in the previous week of 10.94%.
The negative outlook is primarily influenced by unfavorable KAS fundamentals, as interest in the cryptocurrency seems to be waning among investors.
Rising Supply Levels Pose a Threat to KAS Growth
Reports from Kaspalytics reveal a notable increase in the circulating supply of KAS on various crypto exchanges. In the last day alone, the circulating supply of KAS peaked at a historical high of 25.62 billion KAS available for trading. The continuous growth in circulating supply might result in a squeezed demand.
A demand squeeze occurs when the supply of an asset surpasses its demand, leading to a potential decline in its value.
As the supply of KAS expanded, there was a decrease in the number of transactions taking place within the same period.
Furthermore, the number of successful transactions dropped significantly from 212,920 to 50,520 on regular exchanges, representing a 76.13% decrease. This decline hints at a likely price downturn.
In this context, regular exchanges refer to all cryptocurrency trading platforms excluding Coinbase.
The sharp decline in transaction volumes across these platforms indicates a diminishing interest in KAS, potentially resulting in a substantial price drop.
Anticipating a 10% Decline in Value
Currently, KAS is at a crucial juncture on its chart, trading slightly above the support level at $0.1276.
Support levels typically trigger significant price surges. However, KAS has been sluggish following this level breach, indicating weak buying pressure overall.
If this support level gives way, KAS might experience a 10.47% drop, pushing it towards the bottom of the consolidation channel at $0.1147, where it exited on January 14.
Additionally, data from the derivatives market suggests a bearish trend for KAS. The recent liquidation figures show unfavorable conditions for long traders, with $719,900 in long contracts forcefully closed compared to $51,740 in short positions.
Such a significant gap indicates a preference for short trading, possibly leading to a further decrease in KAS’s price from its current level.