Key Takeaways
What sparked FLOKI’s bull trap?
The bullish move for Bitcoin gave the altcoin market short-term confidence, and its quick retreat swung the sentiment bearishly, taking FLOKI traders on a volatile ride.
What’s next for FLOKI?
The on-chain metrics did not reveal significant accumulation from holders. Combined with its recent bearish momentum, bulls should not bet on a recovery just yet.
The Open Interest behind FLOKI [FLOKI] saw a triple-digit percentage jump on the 21st of October.
Together with sizeable derivative inflows, the signs appeared to point toward strong bullish momentum, but AMBCrypto reported that a bull trap for FLOKI was possible.
The memecoin did indeed see its short-term bullishness fade after the 40% rally. In the 36 hours prior to the time of writing, FLOKI has shed 13.4% in value, failing to scale the local supply zone at $0.000084.
The rejection came on the back of heightened volatility for Bitcoin [BTC]. Crypto analyst Axel Adler Jr observed that the Bitcoin volatility index rose above 95% for the third time within a month.
It was a warning sign that traders should expect sharp price moves.
Source: FLOKI/USDT on TradingView
This helped explain the bull trap that FLOKI witnessed in the past 36 hours. Despite the rejection at the supply zone at $0.0084, the market structure of FLOKI on the 1-day chart was bullish.
This internal structure shift came after the local swing high at $0.0000785 was breached during Monday’s rally. However, the Awesome Oscillator continued to flash bearish momentum.
The A/D volume indicator showed buying pressure was neither powerful nor consistent enough to force an uptrend from here.
While the internal structure shift was a bullish outcome, swing traders must remain wary of going long.
On-chain metrics signal more trouble for FLOKI bulls
The mean coin age saw an abrupt drop on the 11th of October, after the massive liquidation cascade on the 10th of October. The dormant circulation also saw a huge spike.
Together, they showed a high amount of token movement between wallets, a classic sign of a wave of selling.
Over the past few days, even though the daily active addresses metric has picked up, the mean coin age has remained flat.
This showed that a network-wide accumulation phase was not underway. It reinforced the idea that FLOKI bulls should remain cautious.
