Celestia’s TIA Token Surges 25%, Leaves Crypto Traders in Disbelief

As a researcher with experience in the cryptocurrency market, I find the recent surge of Celestia’s native cryptocurrency TIA intriguing. The 25% price increase within a week is impressive, particularly given the five-month downtrend that preceded it. However, traders remain skeptical and continue to short TIA perpetual futures, suggesting negative funding rates.

As a data analyst, I’ve observed an impressive surge in the value of Celestia’s native cryptocurrency, TIA. This week alone, TIA has experienced a significant gain of approximately 25% and is currently trading at around $7.30. Amongst the top 100 digital assets by market capitalization, TIA boasts the best performance.

Traders express doubt over the current price increase and are hedging their bets against it by selling perpetual crypto futures, as indicated by the negative funding rates monitored by CoinGlass.

Over the weekend, the average funding rates across cryptocurrency exchanges turned negative, amounting to a -0.1231% rate since then. This represents the strongest bias towards bearish wagers in the past six months.

Every eight hours, funding rates are determined and calculated based on the inputs of traders. These rates signify the expense incurred by holding bullish or bearish wagers. When the rate is negative, it means that traders with open short positions, betting on a price decrease, are required to pay a fee to those holding long positions. This situation arises when there’s a greater demand for short positions compared to long positions.

It seems that the preference for short positions during a price surge is reminiscent of recency bias, where traders give excessive importance to TIA’s recent price drop compared to other significant factors. The TIA has experienced a five-month decline, plummeting from $21 to nearly $5. Consequently, it’s not unexpected that traders would sell off the latest rebound.

Traders might be underestimating the significance of modular blockchain Celestia in acting as a data availability layer for emerging layer 2 networks, such as the popular decentralized exchange Orderly Network in Web3 trading. Consequently, the recent price surge of these assets could persist.

As a crypto investor, I’ve come to understand the importance of a data availability layer in the context of on-chain perpetual markets. The challenge with these markets is that ensuring safe and permissionless liquidity is no small feat. So it makes perfect sense to have a middle layer that can offer shared liquidity to any exchange as we move forward, making on-chain perps markets more practical and accessible. According to pseudonymous analyst DeFi^2, this solution seems evident.

“Celestia, which plays a crucial role in such situations, is experiencing several favorable conditions this week that could lead to a solid market bottom formation. Notably, the Modular Summit is happening this week with Celestia as its focal point.” (DeFi^2 stated.)

As a blockchain analyst, I’d describe Celestia as follows: I, Celestia, function as a versatile blockchain platform that distinctly separates consensus from execution. This configuration significantly enhances my scalability capabilities. In essence, I serve as a data storage system for rollups and layer 2 networks, thereby enabling them to operate more swiftly and process an increased number of transactions.

Expert: Orderly Network, a provider of permissionless liquidity and infrastructure for decentralized trading on the Near blockchain, relies on Celestia for data availability. On July 5th, Orderly Network reported a record-breaking cumulative trading volume of $6.2 billion, alongside over $6.6 million in accumulated transaction fees. This represents approximately 40% of all data uploaded to the Celestia network. According to an email shared with CoinDesk.

As an analyst, I would rephrase it this way: The preference for short positions might lead to even greater price increases. The funding fees that traders with short positions are currently paying will become increasingly burdensome if prices continue to be robust. Consequently, these traders may be compelled to exit their bearish bets, which could result in a short squeeze rally and cause prices to rise further.