Over the past 24 hours, Canton Network [CC] has moved sharply higher as liquidity in the market continued to build, recording a gain of nearly 13%.
While the price action appears to have breached a significant technical level on the chart, questions around demand remain unresolved.
Perpetual traders appear to be the primary force behind the recent gains, raising concerns about the durability of the rally.
Perpetual investors remain the driving force
Available data suggests that CC’s recent price appreciation has been largely fueled by activity in the perpetual futures market.
CoinGlass data showed that during the period in which the asset gained notable price momentum, Open Interest rose sharply.
Open Interest measures the total amount of capital tied up in active perpetual contracts.
In this case, Open Interest climbed to $21.1 million, following an additional inflow of $3.12 million, indicating a surge in leveraged positions.
However, this leverage-driven rally may be vulnerable to a pullback as other sentiment indicators begin to shift.
The Open Interest–Weighted Funding Rate has dropped significantly into negative territory, suggesting that market liquidity is increasingly favoring short positions on CC.
In addition, trading volume has declined even as price continues to rise.
This divergence suggests that the rally lacks strong organic momentum and remains heavily leverage-driven, a combination that often signals increased downside risk.
Bullish breakout still in play
Despite these concerns, the rally has been strong enough to push CC above a key resistance level tied to a well-known bullish structure, the descending channel.
A descending channel consists of two downward-sloping trendlines, with one acting as support and the other as resistance, within which price typically consolidates.
A breakout above the resistance line often signals the potential for further upside, with price targeting the upper boundary of the channel, currently near $0.15 on the chart.
That said, the continuation of this move depends on CC’s ability to firmly hold above the former resistance level. More importantly, overall momentum must turn decisively bullish for the asset to sustain a higher trend.
Momentum begins to fade
Momentum indicators suggest early signs of weakness.
Market analysis using the Moving Average Ribbon, which combines multiple simple moving averages (20, 50, 100, and 200) to assess trend strength, pointed to growing bearish pressure.
At press time, the SMA 100 sat above the SMA 20 and SMA 50, while the SMA 200 also remained above the SMA 20.
When longer-term moving averages dominate shorter-term ones, it often indicates that the prevailing uptrend is losing strength.
This setup implies that price could face a downturn in the near term.
However, traders will closely watch whether the SMA 20 crosses above the SMA 50 or flips the SMA 200, as either move could signal renewed bullish momentum.
The Relative Strength Index (RSI), which measures momentum based on the speed and magnitude of price changes, shows that CC still retains some strength.
The RSI remains within the bullish zone between 50 and 70 and currently reads 53. Although the indicator is trending lower, it still leaves room for a potential rebound as long as it holds above the neutral threshold.
Final Thoughts
- CC rallied on leveraged bets, but momentum signals from volume and Funding Rates failed to confirm the move.
- Moving averages warned that the upside may be short-lived, with the RSI pointing to a similar outlook.
