Siren [SIREN], one of the top-performing altcoins by gains, has extended its rally once again. Over the past 90 days, the asset has surged by approximately 2,450%, while adding another 11% in the last 24 hours.
Although this surge may attract strong investor interest, it carries underlying risk. Market fundamentals do not align with the perpetual trading activity currently driving the gains.
On-chain fundamentals deteriorate
The number of holders of the AI agent token SIREN has declined after reaching an all-time high of 41,570. Since hitting this milestone, holder count has trended downward.
Within about a week, the network lost roughly 2,200 holders, falling to 39,390, according to CoinMarketCap.
A decline in holders typically increases the circulating supply of an asset in the market, which often places downward pressure on price, especially when demand weakens.
SIREN has already reflected part of this trend, with its market capitalization dropping by $490 million. Under normal conditions, such a decline would weigh on price action.
However, SIREN has defied this logic and continued to rally. Analysis indicates that this divergence introduces significant risk.
What is driving the rally?
Despite weakening fundamentals, perpetual traders have largely fueled the rally by increasing long positions.
Long trades occur when traders expect prices to rise. Over the past 24 hours, the cumulative Taker Buy/Sell Ratio across centralized exchanges has remained above 1, with a reading of 1.05, indicating that buy-side pressure dominates.
In simple terms, a Taker Buy-dominated market means that long trade volume exceeds short trade volume within the observed period.
During the same timeframe, short traders recorded higher losses than long traders. CoinGlass liquidation data shows that approximately $817,000 in short positions was liquidated, compared to about $319,000 in long liquidations.
These liquidation imbalances and volume dynamics suggest that long traders currently control the market and continue to push prices higher.
The risk: a potential trap
Despite the ongoing rally, signs point to a possible trap forming for bullish perpetual traders. Market conditions could shift quickly.
The Funding Rate has started to turn negative, even as prices climb. At the time of writing, the Funding Rate stood at -0.0687%, indicating that more traders were opening short positions and sentiment was gradually turning bearish.
If this trend persists, price could eventually respond to the growing bearish pressure. In that scenario, SIREN may reverse course and decline from current levels, erasing a portion of its recent gains.
Final Summary
- SIREN continues to rally despite a decline in holders and a $490 million drop in market capitalization.
- Perpetual markets are driving the rally, but early signs of weakness are emerging.
