Floki Inu (FLOKI), the Shiba Inu-inspired memecoin, has come into the spotlight with a surge in trading activity and a price increase of almost 20% in the past week. However, experts warn that this “popularity” could be short-lived, fueled by hype rather than a strong foundation.
Related reading
Open interest is taking off: newcomers are flocking to FLOKI
The key indicator driving the excitement is the sky-high Futures Open Interest for FLOKI. According to Coinglass, this figure, which reflects the number of outstanding futures contracts, has risen as much as 110% since May 1, reaching a 30-day high of almost $20 million. This signals a wave of new market participants entering FLOKI positions and possibly anticipating further price increases.
Adding fuel to the fire is the significant increase in FLOKI’s daily trading volume. On May 15, Santiment reported daily volume of more than $1 billion, the highest level for FLOKI since late March. This intense buying activity signals a surge in investor interest, pushing the price higher.
Momentum indicators point to a bullish path
What further strengthens the case for a bullish FLOKI is the behavior of the key momentum indicators. Both the Relative Strength Index (RSI) and the Money Flow Index (MFI) are currently comfortably above their neutral lines, at 62.68 and 65.37 respectively. In simpler terms, these numbers suggest that price momentum is leaning toward further gains in the near term.
The broader market sentiment around FLOKI is also remarkably positive. Increased trading volumes and a rise in social media mentions have increased investor interest, indicating that the cryptocurrency is gaining popularity not only among retail traders, but also among institutional investors.
Recent partnerships and strategic developments within the FLOKI ecosystem is likely to drive further growth. These factors, combined with the strong technical indicators, paint a promising picture for FLOKI’s near-term performance, potentially paving the way for a substantial price increase.
However, beneath the shiny exterior lies a possible cause for concern. The Chaikin Money Flow (CMF), an indicator that measures asset buying and selling pressure, paints a rather bearish picture.
Still in the negative zone
Despite the price increase, FLOKI’s CMF remains firmly in negative territory and is currently hovering around -0.11. This suggests that even though the price is rising, buying pressure may be easing.
This difference between price and buying pressure is often seen as a sign of a possible reversal, signaling a rally driven by short-term speculation rather than long-term investor confidence.
Related reading
While FLOKI’s recent performance is undeniably impressive, the underlying factors point to a potentially volatile future. The rise in open interest and trading volume signals a market frenzy, but the negative CMF raises concerns about the sustainability of the rally.
Featured image of Floki, chart from TradingView