The multi-month downtrend channel has finally been breached, will BONK initiate a major reversal?
BONK has finally broken the long-term downtrend channel that lasted for several months, confirming a key bullish breakout, perhaps unveiling a new chapter of trend reversal. As of writing, BONK is priced at $0.00001595, soaring 12.56% within the day, nearing the key resistance of $0.00001900.
This is a key area for determining the validity of the breakout. Once stabilized, this level may turn into strong support, with BONK expected to challenge $0.00003257, potentially increasing by as much as 108%. If it fails to break through, the price might slightly retreat to the range of $0.00001350 to $0.00001400, before waiting for another opportunity.
The derivatives market is fully open, with open interest surging by 17%
Accompanied by a technical breakout, the derivatives market responded accordingly — BONK's open interest surged by 17.28%, currently reported at $23.68 million. This surge reflects a concentration of bullish capital entering the market, with investors' confidence in future prospects sharply rising.
Compared to pure short-term speculation, this incremental capital has a stronger 'faith' component, indicating that this wave of market activity may continue to attract steadfast holders, rather than being a fleeting occurrence.
Financing interest rates turn positive, clear bullish intent
Data shows that the OI weighted financing rate has turned positive from negative, currently at 0.0064%, indicating that market sentiment has completely shifted from neutral to bullish. The previous advantage held by shorts is gradually being reversed.
Although financing rates have not yet overheated, their positive change sufficiently indicates that bulls' desire for upward space is continuously strengthening, also reducing the risk of market bubbles.
Substantial capital is flowing out of exchanges, with a rise in locking-up sentiment
On-chain data reveals a net outflow of $1.39 million from centralized exchanges, indicating that a large amount of BONK is being withdrawn by users, possibly for long-term storage. This directly compresses the market's circulating supply, alleviating selling pressure and providing fuel for the rise.
Historical experience shows that such capital outflows often precede a stronger rebound potential, and the current trend aligns with the optimism in the derivatives market.
Approaching the area of concentrated bearish positions, the risk of liquidation sparks short squeeze expectations
BONK's current price is approaching the liquidity area concentrated among bearish positions, ranging from $0.01520 to $0.01650. A large number of highly leveraged short positions are on the brink of liquidation, and any further rise could trigger a massive liquidation.
Particularly for short positions using 10x to 25x leverage, this area is especially vulnerable. Once triggered, a chain liquidation will create a positive feedback loop of price increase — short stop-loss — further increase, aiding BONK in quickly breaking through $0.00001900 and heading straight for the target of $0.00003257.
Conclusion
BONK's current rise is no longer an isolated technical rebound. The increase in open interest, positive financing rates, capital outflows from exchanges, and the impending crisis of shorts being liquidated — multiple factors converge into a clear upward structure.
As long as $0.00001900 successfully turns into support, BONK may strongly rally in the coming days, launching an aggressive attack towards $0.00003257. This breakout is worth close attention!
