Key Takeaways
What triggered FLOKI’s 25% surge?
FLOKI’s rally was driven by $121 million in derivatives inflows and a 162% jump in Open Interest, signaling aggressive bullish positioning.
Why are analysts warning of a bull trap?
The RSI is overbought above 70, suggesting an imminent correction, while liquidity clusters show potential for volatile reversals in either direction.
The memecoin market recovered 5.5% in the past day. Market analysis shows Floki [FLOKI] played a major role in the rebound, surging 25% within this period—the highest gain among all memecoins.
While overall sentiment remains optimistic, early signs suggest that a bull trap may be forming, with bullish investors potentially facing steep losses. Here’s how AMBCrypto expects the market to unfold.
Where did FLOKI’s rally begin?
The clearest evidence of FLOKI’s rally comes from the derivatives market, where massive liquidity inflows were recorded in the past day.
Data from CoinGlass shows that Open Interest—the total number of unsettled derivative contracts—surged 162% to $37.5 million.
This suggests that investors are betting on FLOKI to lead the memecoin market recovery, as total crypto market capitalization rebounds to $3.75 trillion from $3.24 trillion on the 11th of October.
Source: CoinGlass
The Long/Short Ratio indicates that most derivative trading volume came from long traders—investors betting on further price gains. This means that market liquidity has tilted heavily in favor of bullish positions.
So far, most traders who took opposing short positions have lost. Liquidation data shows that $275,000 worth of short positions were wiped out as bearish traders were liquidated.
A bull trap ahead
Overconfident bulls could soon face a market reversal, according to technical indicators such as the Relative Strength Index (RSI) and the Average Directional Index (ADX).
The ADX, which measures trend strength, confirmed that the press time trend remained strong, reading at 38 rising. A high ADX value suggested that price momentum was likely to continue in the same direction.
Source: TrdaingView
However, the RSI gives a more cautionary signal. It shows that long traders in the derivatives market — those currently bullish — may face liquidation soon.
The RSI has entered the overbought zone above 70, a level historically followed by price corrections.
If this pattern repeats, the RSI will likely drop back into the bullish range between 50 and 70 after flushing out overleveraged traders, paving the way for a more sustainable rally.
What’s the likely scenario?
To forecast the next move, AMBCrypto analyzed the liquidation heat map to identify high-liquidity clusters on the chart.
Liquidity clusters represent areas of unfilled orders, which often act as magnets that pull prices toward them before reversing in the opposite direction.
Source: CoinGlass
Currently, there are significant clusters both above and below the current price, implying that the market could move in either direction without a clear dominant trend.
If price moves toward the upper liquidity clusters first, a subsequent decline may follow—aligning with the RSI’s signal for a short-term correction before another rally.
However, if price dips into lower clusters first, a deeper bearish outcome becomes more likely.
