Key Takeaways
What fueled IP’s latest fall on the charts?
Story’s native token, IP, fell sharply over intellectual property disputes tied to tokens issued on its platform.
What were the consequences of IP’s bout of price depreciation?
Derivatives were key drivers of the fall, especially as massive liquidity outflows hit the market.
Story Protocol’s IP recorded a notable decline on the charts, dropping by 10% over the past 24 hours. This, following growing concerns about intellectual property issues on the platform.
In fact, at the time of writing, market analysis seemed to indicate that the decline could be further affected by derivative investors. Especially if they continue to place major bets against the asset.
$200 million in outflows
Story Protocol, a platform built to monetize creator tokens and intellectual property, has suffered heavily due to a dispute surrounding the creator token – Baby Shark.
Pinkfong, an entertainment company, denied any association with Baby Shark, triggering massive outflows in the early hours of 29 September.
After the announcement, the Baby Shark token tumbled by 90%, with its market capitalization plunging from over $200 million to a press time value of just $2.33 million.
Source: CoinMarketCap
At press time, Community Sentiment, an aggregator used to gauge investor positions, revealed that only 40% of participants were bullish, while the majority turned sellers.
Interestingly, the sell-off was not coordinated across the board though. Instead, it was driven by a particular segment of the market that accelerated the decline.
Leveraged investors back out
Leveraged traders proved the most bearish, amplifying the downward pressure on IP’s price.
In fact, derivatives market data on CoinGlass revealed that liquidity outflows in the past 24 hours hit $20 million. All while Open Interest dropped to $273 million.
Source: CoinMarketCap
Trading volume in derivatives also weakened, with the long-to-short ratio falling to 0.95 – Below the neutral threshold of 1.
A drop of this magnitude usually means that more investors are shorting the asset, positioning themselves to benefit from further downside moves.
Spot trading activity also contracted, with overall volume falling by more than 54% to $304 million in the last 24 hours. This implied that fewer investors have been actively participating, with many choosing either to sell or to remain on the sidelines.
Here’s what’s coming up next…
Despite the massive outflows of liquidity, market sentiment suggested that the asset’s direction might be surprisingly bullish.
This perspective was based on liquidity cluster placements above the press time price, as revealed by the liquidation heatmap.
Source: CoinGlass
However, before any potential rally, the altcoin may first retest the liquidity cluster at $8.4, using it as a catalyst for a broader move.
If successful, IP could stage a rebound towards much higher levels, with a strong likelihood of closing in on double-digit territory.
