Raydium is overbought but could still rally if this happens

Raydium has made a strong rise last month, entering overbought territory. However, it indicates the possibility that the funding rate may be increased further.

Raydium (RAY) is up 83% in the last month and has gained 33% in the last seven days alone. The native token of the Solana-based automated market marker hit a 31-month high of $3.59 earlier today; This level was last seen in April 2022.

RAY has seen a small decline in the last few hours and is trading at $3.25 at the time of writing. At this point, the token is down 81% from its all-time high of $16.93 on September 13, 2021.

With a market cap of $858 million, Raydium is currently the 75th largest digital asset in the market.

Will RAY be able to recover again?

According to data provided by Santiment, Raydium’s Relative Strength Index is close to 80. The indicator shows that the asset is overbought and potential profit taking may be on the way.

RAY price, RSI, open interest and funding rate | Source: Santiment

However, Raydium’s total open positions increased by 65% ​​in the last day, from $4.5 million to $7.4 million, according to Santiment.

A sudden increase in an asset’s open positions often leads to higher price volatility due to increased liquidations.

RAY’s open interest has increased with traders betting that the token’s price will drop. Data from Santiment shows that the total Raydium funding rate shifted from 0.06% on October 26 to -0.06% during the reporting period.

The funding rate shows that the amount of short-term transactions dominating RAY’s open positions has increased.

If short RAY liquidations start increasing, the asset could possibly witness another bullish momentum. However, increasing open interest and RSI signal high price volatility as the market is still in uncertainty.