Kaspa Rally Driven by Leverage Signals Potential Pullback
The Kaspa rally has been driven by derivative inflows rather than increased network use. Open interest jumped 42% in 24 hours to $66.9 million, supported by a positive weighted funding rate of 0.0035%, indicating high leverage among bullish traders.
On-chain metrics paint a different picture. Active addresses plunged from 513,110 to 11,770, down 97.7% since November 11. UTXO distribution turned negative. Account balances and transaction counts also fell, signaling weak real demand.
Spot market data shows $1.3 million of KAS sold by retail investors over the past 48 hours. However, non-zero KAS holders remain stable at 54.84 million addresses, suggesting a solid base of long-term investors.
The reliance on derivatives leverage raises pullback risks for the Kaspa rally. Traders should monitor on-chain signals and funding rates. A short‐term correction appears likely, but a steep crash is less probable given stable token holders.
Bearish
In the short term, the Kaspa rally’s reliance on derivatives leverage and a high open interest surge mirrors previous leverage-driven altcoin price spikes, which often ended in swift pullbacks once funding rates normalized. For instance, past cases like Solana’s leveraged rally in 2023 led to a rapid correction when on-chain activity failed to support price levels. Similarly, Kaspa’s declining active addresses, negative UTXO distribution, and retail profit-taking ($1.3m sold) indicate weakening spot demand. High funding rates also raise liquidation risks if the bulls lose momentum.
In the medium to long term, stable non-zero KAS holders (54.84m addresses) suggest a loyal investor base, which can cushion severe declines. However, without renewed on-chain growth or increased user adoption, Kaspa may struggle to sustain its price beyond a technical correction. Overall, expect a bearish phase characterized by a short-term price pullback, followed by potential consolidation, unless on-chain metrics recover.