In the cryptocurrency market, Starknet (STRK), a layer 2 (L2) token, has been attracting a lot of attention lately. Despite its market cap ranking of 71st, STRK’s price has increased by 10% over the past week. This article will take an in-depth look at Starknet’s latest market performance, technical indicators, and future price predictions.
market performance
Layer 2 (L2) tokens have seen a huge surge in value over the past week. Leading assets such as Optimism (OP) and Arbitrum (ARB) have both seen double-digit price gains. At press time, they were still rising in value, up 29% and 16% respectively in the past seven days.
The rally also extended to another L2 token, Starknet (STRK), whose price increased by 10% during the same period. Starknet is now among the top 100 coins. During the reporting period, the surge in trading activity and price of Starknet (STRK) led to an increase in its market capitalization. As of this writing, the altcoin’s market capitalization is $905 million, its highest level in nearly seven days. It is now the 71st largest cryptocurrency asset by market capitalization.
Market Cap and Futures Open Interest
The market cap of an asset measures the total value of its tokens/coins in circulation. When market capitalization surges, so does the total value of these tokens. This is a positive sign indicating rising prices and increased demand for the asset. The price of STRK has risen over the past week, leading to increased activity in its derivatives markets. This can be seen in its growing futures open interest. As of this writing, the token’s futures open interest is worth $51 million, up 9% in the last week.
Futures open interest for an asset is the total number of open futures contracts that have not yet been settled. When this value surges, it means more traders are opening new positions. However, many derivatives traders are not convinced that STRK's current rally can be sustained. This led them to call for an increase in short positions. This is based on a reading of token funding rates, which were mostly negative during the review period.
Financing interest rates and market sentiment
Funding rates are a mechanism used in perpetual futures contracts to ensure that the contract price of an asset is close to its spot price. When the funding rate is negative, it means that more traders are buying the asset in the expectation that the price will fall than in the hope that the price will rise.
Despite rising prices, negative funding rates indicate traders are skeptical about continued price increases. This may be because they believe prices have reached a short-term high, or there are other potential risk factors in the market.
Technical Indicators and Price Forecasts
Looking at the single-day chart, some leading technical indicators for STRK hint at the possibility of continued gains. For example, its Chaikin Funds Flow (CMF) is trending upward along with its price. This indicator measures the amount of money flowing into and out of an asset. When it surges, it means the market is supplying liquidity.
Additionally, STRK’s Accumulation/Distribution (A/D) line was trending upward at press time. This indicator measures the cumulative inflows and outflows of an asset. As with STRK, a strong uptrend is confirmed when price and the A/D line rise simultaneously, indicating strong buying pressure.
If this buying pressure persists, the coin’s price could climb to $0.63. However, if profit-taking activity begins, the price of STRK could drop to the $0.5 price level.
Conclusion: To summarize, Starknet (STRK)’s market performance over the past week has shown strong momentum, although some technical indicators and market sentiment suggest that volatility may lie ahead. Investors should pay attention to the latest developments and technical indicators in the market to make informed investment decisions.