How SKY crypto’s 12% price drop raises the risk of further losses

Market Analysis

SKY faces further downside risks as derivatives activity weakens despite healthy on-chain fundamentals. Market analysis indicates that further decline isn’t off the table and that investors need to be more wary.

Whale Activity

Whales, traders who control large amounts of capital in an asset, have been the major influencing factor behind SKY’s recent performance. The Whale Retail Delta has a reading of 0.288 as of writing, a surge from its previous day’s level, confirming that whale activity in the market increased over this period.

On-Chain Fundamentals

On-chain, the Sky Protocol continues to maintain decent performance. According to data from DeFiLlama, the protocol’s fees and token holder revenue remain steady and continue to grow.

Funding Rate and Open Interest

The perpetual market has provided the clearest indication that a potential decline could be ahead for SKY in the coming trading sessions. This comes as the Funding Rate turns negative, reading -0.0008% at the time of writing. Notably, the Funding Rate began declining from 0.0079% in the early hours of the 8th of October to its present level. When there is a notable decline in the Funding Rate, it confirms that selling began in the early hours of the day. This has also been followed by a contraction in the capital base of the perpetual market. Open Interest, which calculates the amount of capital in the perpetual contracts of an asset, has declined by 13% to roughly $51 million.