SPX rallies 16% amid fresh capital inflow – Can bulls keep control?

The memecoin sector has emerged as the biggest beneficiary of fresh capital entering the crypto market over the past day, posting an average gain of 9.11%.

SPX6900 [SPX], in turn, posted an upswing of about 16% following this capital inflow, but market data suggests more complexity beneath the surface.

AMBCrypto’s findings show that sellers are still attempting to position the market in a way that could tilt conditions in their favor.

Capital inflow remains elevated

Liquidity circulating within the SPX market has surged across both the Spot and Perpetual markets.

The perpetual market recorded the strongest capital inflow. Open Interest (OI), which reflects the level of liquidity flowing into perpetual contracts, rose by 15% to $42 million as of the 4th of January.

Spot market activity also remained bullish, with more SPX tokens moving out of exchanges than flowing in.

Higher outflows than inflows suggest that investors are transferring the memecoin to private wallets for long-term holding. This behavior reduces the supply available for trading on exchanges.

Reports show that so far this week, starting from the 29th of December, total inflows and outflows stood at $5.56 million at press time. On a cumulative basis, capital movement has reached $11.86 million.

Liquidity pushes against sellers

Liquidation data showed strong resistance against traders betting on downside moves.

CoinGlass data indicated that over the past day, short traders realized significantly more losses than long traders. For every $1 lost by long traders, short traders lost $17.

In absolute terms, long traders lost $5,800, while short traders recorded losses of $100,800. This imbalance highlights the short-term dominance established by long traders in the market.

The Liquidation Heatmap suggests a continued possibility of upward price movement, though any further gains may remain limited.

However, the broader picture remains mixed. The same heatmap reveals sizable liquidity clusters positioned below current price levels, keeping the risk of a downside move firmly in play.

Shorts refuse to retreat

Despite the mounting losses among short traders, they have not exited the market. Instead, many appear positioned in anticipation of a potential price move that could favor their bets.

The Open Interest-Weighted Funding Rate, which tracks whether market liquidity favors short or long contracts, pointed to seller dominance.

This indicator remains negative, with a reading of -0.0037%, signaling that short positions continue to outweigh long contracts in the perpetual market.

For now, while optimism persists among long traders, caution remains warranted as sell-side pressure continues to shape market dynamics.