KAS supply hits record high – Examining the odds of a 10% decline in price

• KAS supply on exchanges climbed to a record high, while transaction counts slid lower.
• Altcoin’s support level will determine the next price move for KAS

Over the last 24 hours, Kaspa [KAS] has gained by 2.72% on the charts, with the altcoin trading at $0.1322. However, market sentiment seemed to suggest it could begin dropping soon, extending its previous week’s losses of 10.94%.

In fact, this bearish sentiment has been driven by unfavorable KAS fundamentals. Especially as market participants continue to lose interest in the crypto asset.

Growing supply threatens KAS growth

There has been a surge in the available supply of KAS across cryptocurrency exchanges, according to Kaspalytics. In the last 24 hours alone, the circulating supply of KAS hit a record high of 25.62 billion KAS available on exchanges. A growing circulating supply on exchanges could lead to a demand squeeze.

A demand squeeze occurs when the supply of an asset isn’t met with adequate demand, or even faces lower demand, causing the asset to decline.

As the KAS supply grew, there has been a reduction in the number of transactions occurring within the same timeframe.

Also, the accepted transaction count—successful transactions—dropped from 212,920 to 50,520 on normal exchanges. This represented a 76.13% decline – Indicating a potential price drop.

Normal exchanges in this scenario include all cryptocurrency exchanges, except Coinbase.

A massive drop in transaction counts across these exchanges revealed that the market is starting to lose interest in KAS. This could result in a major downside for its price.

A 10% drop may be on the horizon

Right now, KAS is at a major crossroads on the chart, with the altcoin trading sluggishly above its support level at $0.1276.

Typically, support levels act as catalysts for a major price pump to the upside. However, KAS has moved slowly after hitting this level, indicating weak buying pressure across the board. 

Should this support level fail, KAS could see a decline of 10.47%. This will push it to the base of the consolidation channel at $0.1147, which it exited on 14 January.

At the same time, the derivative market revealed that KAS may be skewed to fall lower. Especially since the liquidation data for the last six days has been unfavorable for long traders.

Between 18 January and now, a total of $719,900 in long contracts has been forcefully closed in the market, compared to $51,740 in short positions closed.

A large disparity such as this indicates that the market is in favor of short traders, and there is a possibility that the price of KAS will drop further from its press time level.