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Crypto Traders Are In Disbelief As Celestia’s TIA Token Surges 25%
Data availability blockchain network Celestia’s native cryptocurrency TIA jumped 25% to $7.30 this week, marking the best performance among the top 100 digital assets by market value.
According to funding rates tracked by CoinGlass, traders seem skeptical about the current price surge and are taking bearish positions, shorting perpetual futures tied to the cryptocurrency.
Average funding rates across exchanges turned negative over the weekend and have since fallen to -0.1231%, reaching levels last seen in January. In other words, the bearish betting trend is more pronounced in six months.
Calculated and collected by traders every eight hours, financing rates represent the cost of holding bullish or bearish bets. A negative rate means that traders with short positions, betting on a price decline, are paying a financing fee to longs. This occurs when there is a high demand for short positions relative to long positions.
The propensity for shorts during a price rally seems like a classic case of recency biasso trading is giving more weight to TIA’s price crash in recent months than other vital developments. TIA’s latest bounce comes after a five-month downtrend that saw prices slide 80% from $21 to below $5. Therefore, it’s not particularly surprising to see traders selling the bounce.
However, traders may be overlooking the role of the Celestia modular blockchain as a data availability layer for layer 2 networks like the burgeoning permissionless liquidity layer for Web3 trading, Orderly Network, meaning the price rebound could be sustainable.
“The need for a data availability layer here makes sense after realizing that secure/permissionless liquidity is by far one of the biggest hurdles in making onchain perp markets viable. So having a middleman that can provide shared liquidity to any exchange seems like an obvious solution for the future,” pseudonymous analyst DeFi^2 explained on X.
“As a true building block of infrastructure for cases like this, Celestia has many of the right factors coming together this week to create a solid market bottom, including the Modular Summit which will take place this week and will feature Celestia,” DeFi^2 added.
Celestia, a modular blockchain, separates consensus from execution, increasing scalability. It acts as a storage system for data used by rollups and layer 2 networks, helping them become faster and handle more transactions.
Orderly Network, a permissionless liquidity layer and infrastructure provider for Web3 trading based on the Near blockchain, uses Celestia for data availability. On July 5, Orderly Network’s cumulative trading volume hit a record $6.2 billion, with cumulative net fees exceeding $6.6 million, representing 40% of the total data published on the Celestia network, the network told CoinDesk in an email.
Furthermore, the appetite for short positions could catalyze further price increases. The financing fee that traders holding short positions are currently paying will become a burden if prices remain resilient, eventually forcing them to square their bearish bets. This, in turn, could push prices higher in what is known as a short squeeze rally.