Double Zero – Could 2Z’s 17% dip be a short-term shakeout?

Key Takeaways 

What caused Double Zero to drop 17% despite positive listing news? 

Low liquidity and rising selling pressure in the derivatives market triggered the sharp decline.

 Is there potential for a 2Z rebound? 

Yes, strong spot buying and a positive funding rate suggest renewed bullish sentiment and a possible recovery.

---

At the time of writing, Double Zero [2Z] saw a 17% decline in the last day, a move that came as a shock to investors after the asset had regained a positive outlook from its potential Coinbase listing.

The largest U.S. exchange reportedly plans to add the cryptocurrency to its listing roadmap after receiving a no-action letter from the Securities and Exchange Commission (SEC).

This is largely attributed to the decline in value to perpetual investors, driving market activity. Still, questions remain over whether this marks the beginning of a major downturn.

Low liquidity hits the market

Low liquidity circulating in the derivatives market has played a key role in 2Z’s fall over the past day.

CoinGlass data shows that Open Interest (OI) recorded a $7.3 million outflow, at press time, bringing it down to $46.5 million.

This outflow of capital, alongside the price decline, indicates that investors are growing fearful and that the asset could face a deeper downturn.

However, momentum has risen sharply, reaching a high of $297 million in the last day. This shows that the recent decline is heavily backed by volatility, which could cloud any potential rebound in the short term.

Likewise, the Taker Buy/Sell Ratio shows that sellers are dominating, with a reading of 0.95 on the chart, implying that selling pressure remains high.

Is this over for 2Z?

Further market analysis shows that there’s still a possibility for a rebound.

The Funding Rate, for context, shows that long investors are currently paying the most funding fees as they anticipate the market to move in their favor.

The Open Interest Weighted Funding Rate shows that long positions control most of the liquidity still circulating in the derivatives market.

The positive OI-weighted funding rate on the chart indicates that the recent fallout has likely flushed out paper-handed investors

This shift offers a fresh outlook for a potential price recovery in the coming days. More confluence is beginning to surface across the market.

Spot buying grows

Spot trading activity has increased significantly in recent hours. On October 9, the asset recorded its highest spot purchases so far, totaling $8.7 million.

Interestingly, accumulation from the spot market is higher than total sales recorded in the derivatives market—a difference of around $1.4 million.

Typically, derivative contract closures exceed spot purchases. However, this time, the higher spot volume indicates that the sell-off may only be temporary.

With this growing spot interest and market sentiment shifting, likely, 2Z could soon stage an upward rally.