The CRO futures market was highly bearish on Nov. 14, with short traders paying a premium of as much as 3% to long traders.
After last week’s dramatic collapse of the FTX, Crypto.com’s native token Cronos resisted mounting sell-pressure on Nov. 14. A watershed price recovery is now being predicted for CRO/USD.
In the days after CRO’s price had fallen to $0.05, its lowest level since April 2020 – a 60% price decline from November’s peak of $0.178 – the stock fluctuated between profits and losses.
The Funding Rate of CRO Drops by -3% Overall
The era of CRO’s price decline appeared alongside an intense drop in the token’s perpetual futures allotment rates.
Market makers use funding rates to pay for the difference between the spot and the futures price difference. The positive funding rate indicates that bullish traders (long positions) are paying bearish traders (short positions), meaning they are confident in the market’s recovery.
Related: FTX and Alameda accounts frozen by crypto exchange Kraken
Negative funding rates, however, allow short traders to maintain open positions by paying long traders. Traders are highly bearish on CRO, as its funding rates dropped to minus 3% on November 14.
FTX Contagion Fears Hit Crypto.com
Following the FTX fiasco, CRO shares declined due to concerns about contagion, especially about Crypto.com.
According to analysts, Crypto.com’s token CRO makes up 40% of the exchange’s total assets and is held as reserves, making it a likely candidate for insolvency.
4.https://t.co/INIxikfNzy holds $1.6B worth of BTC/ETH/USDT/USDC/DAI/BUSD assets, accounting for 60%.
40% of assets are low liquidity assets.
— Lookonchain (@lookonchain) November 13, 2022
Before demonstrating its reserves to the public, Crypto.com also moved $210 million in stablecoins from Binance and Circle. Earlier on April 21, CRO dropped to a new low, according to Binance CEO Changpeng Zhao.
If an exchange have to move large amounts of crypto before or after they demonstrate their wallet addresses, it is a clear sign of problems. Stay away. Stay #SAFU. 🙏
— CZ 🔶 Binance (@cz_binance) November 13, 2022
A $400 million Ether ETH was also fraudulently acquired by Crypto.com
Gate.io exchange wallet, rather than its cold storage, was used for the transaction, which involved $1,250. After recovering the funds, the exchange faced many questions.
Crypto_com CEO is claiming they “accidentally” sent $400 million of their eth to the wrong wallet.
He’s either lying, or incompetent. https://t.co/hWXvPqBime
— Coffeezilla (@coffeebreak_YT) November 13, 2022
Argus Inc. tracked 14 million withdrawals from Crypto.com over the weekend, including $39 million in ETH.
Could There Be a 50% Rally in Cronos Prices?
While CRO’s price could rally in the coming weeks from a technical standpoint, its fundamentals remain weak.
Also Read: Tether has frozen a 48 million USDT asset on Tron Owned by FTX
Several indicators support this bullish outlook, including CRO’s weekly relative strength index (RSI), which has fallen to nearly 30, or around “oversold” territory. The following graph shows a 75% recovery rally from $0.099 to $0.162 after a similar drop earlier this year.
Additionally, $0.061 has historically been a strong support level, which is a bullish indicator. Additionally, there is a record volume profile visible range (VPVR) for CRO at $0.061 and $0.111.
Therefore, CRO could reach $0.111, an increase of over 50% from its current price level.
Contrary to Terra’s collapse in May, CRO/USD’s drop likely occurred as funding rates fell alongside it, as was the case with Terra’s destruction in May. Therefore, CRO’s recovery prospects may be dampened by persistent bearish sentiment in the cryptocurrency market.