Celestia’s TIA token has seen a significant surge of 25% in just one week, indicating a positive turnaround after a prolonged five-month downtrend. This increase has brought the price of TIA to $7.30, making it one of the top performers among the top 100 digital assets by market value.
Despite the rally, traders are showing skepticism and continuing to take bearish positions by shorting perpetual futures linked to TIA. Funding rates, as tracked by CoinGlass, have turned negative, with an average rate of -0.1231% observed across exchanges. This negative funding rate suggests a strong bias towards bearish bets, the most significant seen in the past six months.
The recent surge in TIA’s price has led to an increase in short positions, reflecting a recency bias among traders. This bias is likely due to the substantial price drop TIA experienced over the past five months, falling by 80% from $21 to less than $5. However, traders may be overlooking the role of Celestia, a modular blockchain that serves as a data availability layer for layer 2 networks like Orderly Network.
Orderly Network, a permissionless liquidity layer for Web3 trading built on the Near blockchain, relies on Celestia for data availability. The network has reported a record trading volume of $6.2 billion and net fees exceeding $6.6 million, accounting for 40% of the total data posted on the Celestia network.
The current bias towards short positions could potentially lead to a short squeeze rally if prices continue to remain strong. Traders holding short positions will eventually need to cover their positions, potentially driving up prices further.
Overall, the recent price surge in TIA may be sustainable due to the fundamental role of Celestia in providing data availability for layer 2 networks. As the market continues to evolve, it will be interesting to see how traders’ sentiments and funding rates impact the future price movements of TIA.