PROM’s rally has a catch – And it’s hiding in the Spot market

Prom [PROM] began the day on a bullish note, with the asset making a higher high on the chart as it surged 14%. There is still potential for further gains, adding to the cumulative gain of 228% over the past 90 days.

Right now, despite the bullish momentum in the market, the chances of a drop remain, as Spot flows and the slim gap between liquidated capital call for caution.

Capital inflows support PROM’s rally

Capital rotating into the market over the past 24 hours has contributed to PROM’s overall performance. The perpetual market recorded an additional $6.6 million in inflows as Open Interest jumped to around $19.33 million.

Open Interest measures the total value of outstanding positions in an asset’s perpetual contracts.

However, more inflows do not necessarily indicate a bullish scenario. In this case, the positive funding rate of 0.0047% further confirms that bulls are in control.

Additionally, as the price surges, there has been a significant increase in volume, following the same direction. A combination of rising volume and price implies that the market is bullish and the asset is likely to continue moving upwards.

At press time, data from CoinGlass showed that perpetual market volume alone was up 177% to $49.05 million. On the other hand, Spot volume reached $9.15 million.

Spot selling raises concerns

Spot selling and the narrow gap between liquidated long and short positions raise concerns about whether PROM can sustain its bullish gains.

In the Spot market, following the recent PROM surge, investors have been selling more than they have been accumulating the asset. Spot market netflow data showed a positive netflow of $406,480, according to CoinGlass.

Netflow measures the difference between the inflows and outflows of PROM from the market. When positive, it shows that more tokens are flowing into exchanges than leaving them, which could indicate increased selling pressure. If this continues, it could weigh on the price.

In the perpetual market, on the other hand, there has been very little disparity between the long and short positions liquidated over the past 24 hours.

Liquidations occur when market movements force traders to close their positions after prices hit their liquidation thresholds.  Presently, long traders in the market have lost $34,170 over the past day, while short traders have lost $42,940 within the same period.

Usually, during a leading trend, traders on the opposite side lose at least 1x to 2x more. This implies that short traders would be expected to lose more in a bullish market. However, in this case, long traders have lost more despite the price moving upward.

Final Summary

• PROM surged following an Open Interest rise to $19.33 million, with perpetual trading volume climbing 177% to $49.05 million.

• The positive Spot netflow of $406,000 and the narrow gap between long and short liquidations raise concerns about the sustainability of PROM’s rally.