FLOKI Faces Reversal Risk After 40% Surge: Market Signals Warn of Correction
After a strong week of growth with a 40% increase, the meme coin FLOKI recorded its highest price in the past 6 months. This price increase has attracted a lot of attention from the investment community, especially when the altcoin market is in a clear state of differentiation. However, beneath the current excitement are a series of technical and psychological signals warning that FLOKI may be about to enter a correction phase.
Surge in Open Interest: Over-Excitement Signal
Over the past two days, the Open Interest (OI) for FLOKI derivatives contracts has increased sharply from $40 million to $75 million, an increase of more than 87%. This is an indication that investors are increasingly paying attention to FLOKI, largely driven by FOMO, the fear of missing out on profitable opportunities.
In addition, the positive funding ratio shows that Long positions are dominating the derivatives market, indicating that the majority of traders believe that the price will continue to rise. However, historically, a spike in open interest and a positive funding ratio often heralds large volatility, as excessive leverage can easily lead to massive liquidations if the price corrects slightly.
MVRV indicator shows dangerous profit-taking zone
Another notable technical factor is the MVRV (Market Value to Realized Value) ratio, a tool to assess investors' unrealized profits. Currently, this indicator for FLOKI has reached 32.62%, meaning that buyers in the past 30 days are holding an average profit of about 32%.
In on-chain analysis, the MVRV zone between 19% and 32% is often referred to as the “danger zone” where investors tend to take profits. This increases the possibility of short-term selling pressure. Previous corrections in FLOKI have occurred after MVRV entered this zone, raising concerns that the current cycle may not be an exception.
Key Levels and Next Scenario
Currently, FLOKI is trading around $0.000135. The nearest support level at $0.000132 plays a key role in maintaining the bullish structure. If this support holds, FLOKI is likely to continue towards the next resistance zone at $0.000148. Breaking above this level would confirm a sustained uptrend, with the next price target possibly reaching $0.000167.
However, if the market turns around and selling pressure increases, losing support at $0.000132 could drag the price down to $0.000114. This is an area where many investors will start to reconsider their positions, potentially triggering a deeper correction and invalidating the short-term uptrend.
Summary: Conditional Optimism
FLOKI's recent rally is a testament to the strong appeal of this meme coin amid a new wave of investment. However, current market data shows an over-excitement, accompanied by technical indicators warning of a correction risk.
To maintain the positive trend, FLOKI needs to hold on to important support and limit the massive profit-taking from short-term investors. On the contrary, if it cannot overcome the pressure from technical indicators and psychology, the uptrend could quickly reverse. Traders should be cautious and thoughtful in making investment decisions, especially when the market is in a volatile state like the present.