Celestia’s TIA Token Soars 25%, Causing Crypto Traders to Be Skeptical

TIA, the native cryptocurrency of data availability blockchain network Celestia, rose 25 percent to $7.30 this week, recording the best performance among the top 100 digital assets by market cap.

According to funding rates tracked by CoinGlass, investors appear skeptical about the ongoing price rally and are showing a bearish outlook by selling perpetual futures tied to the cryptocurrency.

Average funding rates on exchanges turned negative over the weekend, falling to 0.1231%, levels last seen in January. In other words, the bias for bearish bets has been evident for six months.

Funding rates, calculated every eight hours, represent the cost of holding bullish or bearish bets. Negative rates mean that traders with short positions who bet on a price drop pay a funding fee on long positions. They occur when there is high demand for short positions compared to long positions.

TIA’s recent bounce comes after a five-month downtrend that saw prices drop 80% from $21 to below $5. So it’s not surprising that traders are starting to sell on this bounce.

However, traders may be overlooking the fact that modular blockchain Celestia also plays a role as a data availability layer for layer-2 networks like the Orderly Network, the rapidly developing permissionless liquidity layer for Web3 trading, meaning the price jump could be sustainable.

Orderly Network, a permissionless liquidity layer and infrastructure provider for Web3 trading built on the Near blockchain, uses Celestia for data availability. The network previously reported to CoinDesk that cumulative Orderly Network trading volume reached $6.2 billion on July 5, with cumulative net fees exceeding $6.6 million.

The bias for short positions could also catalyze further price appreciation, as the funding fees currently paid by short traders will become a burden if prices remain resilient, eventually forcing them to recoup their bearish bets. This could then prop up prices through a rally known as a short squeeze rally.