Kaspa [KAS] has been among the ringleaders of tokens that have been making waves of late. The asset pulled a 12% gain over the past 24 hours, while its weekly performance stood strong as well, with a 23% increment.
While KAS continues to make an upswing, data points to weakening activity and liquidity positioning that could force a decline for the asset in the short term. Importantly, sentiment is also at play, which is presently changing the dynamics.
KAS rally faces weakening on-chain activity
The activity on-chain hasn‘t supported the expansion that has been witnessed with Kaspa’s price over the past weeks. The Daily Active Users (DAU), which tracks unique addresses on the chain, has significantly plummeted between the 17th of September and press time.
According to data from Kaspalytics, the figure dropped from 36,570 down to roughly 7,910, making a 78% decline within a week. Thats not all. While the amount of active users plummeted, transactions followed suit.
Source: Kaspalytics
The standard transactions count in the past 24 hours specifically had dropped as well, from about 208,480 down to 113,530. This decline meant that over 94,000 transactions were placed in the past day.
One notable point is that transactions via Coinbase for Kaspa had maintained nearly similar levels, suggesting that U.S. investors still hold a stronger bullish outlook.
Liquidity clusters leave room for a pullback
Analysis of KAS using the Liquidation Heatmap warns of a potential for the asset to see a decline based on the liquidity clusters.
Liquidity clusters are areas across the chart that house orders, including buy orders below the price and sell orders above the price, with the depth changing based on the intensity of the coloration.
Source: CoinGlass
At the time of writing, the clusters are lined below the price, with a few clusters above the price. Typically, the closest cluster that carries most of the depth is around the $0.038 level on the chart.
This could be the next support level KAS could trade to in case the momentum changes. For now, with momentum maintaining the bullish lane, the chance that price drops to this zone remains slim.
What is driving KAS higher？
Several factors have contributed to the assets performance, despite the weakening on-chain activity in the market. One of the major driving factors that have contributed to price performance has been sentiment. CoinMarketCap reports the sentiment at 4.81 at the time of this report.
The sentiment uses a scale between -10 and 10, and right now, with its present reading, theres a high chance that the bullish momentum is maintained and the asset continues to rally.
Source: CoinMarketCap
Perpetual Market Capital Flow has also contributed, with Funding Rate and Open Interest remaining in the bullish territory. For now, until theres a clear shift in sentiment, the bullish momentum remains.
Final Summary
- KAS gained 12% in 24 hours, but declining daily active users and transaction count point to weakening on-chain activity.
- Strong sentiment and bullish derivatives positioning continue to support KAS, although liquidity clusters leave room for a pullback toward $0.038.