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OpenAI CEO Sam Altman’s crypto project Worldcoin’s token, WLD, is experiencing a decline due to investor selling pressure. In the altcoin’s futures market, there has been a notable increase in demand for short positions, as evidenced by negative funding rates on major cryptocurrency exchanges. According to Coinglass data, WLD’s funding rate has been predominantly negative since July 11.
What’s Happening with Worldcoin?
Funding rates are a mechanism used in perpetual futures contracts to keep an asset’s contract price close to its spot price. When positive, it means more investors are buying the asset, indicating a higher number of investors expecting a rise in price compared to those expecting a fall.
Conversely, when an asset’s funding rate is negative, it means more investors are taking short positions. This indicates a higher number of investors expecting the asset’s price to fall compared to those hoping to sell at a higher price.
The increase in demand for WLD short positions began after Worldcoin’s developer, Tools for Humanity (TFH), announced plans to release 2 million tokens daily starting July 24. This reflects a lack of confidence in the token, with many investors betting against it. The selling pressure on WLD has increased in recent days, causing its price to drop and leading to the liquidation of several long positions.
Liquidations occur when an asset’s value moves against an investor’s position, forcing the position to close due to insufficient funds to maintain it. Long liquidations happen when the asset’s price falls below a certain level, forcing investors with open positions to buy tokens to exit the market. According to Coinglass data, WLD’s long liquidations reached approximately $11.46 million in the past seven days.
WLD Chart Analysis
The selling sentiment is also present in WLD’s spot market. This is confirmed by the readings of the altcoin’s Parabolic Stop and Reverse (SAR) indicator on the daily chart. At the time of writing, the indicator’s dots are positioned above WLD’s price.
An asset’s Parabolic SAR indicator determines potential trend direction and price reversal points. When the dots are placed above an asset’s price, the market is in a downtrend, indicating that the asset’s price is falling and the decline is likely to continue. If WLD’s price continues to fall, it will trade below the $2 level, with the next price target being $1.80. However, if market sentiment shifts from negative to positive, WLD’s price could rise above $3 and trade at the $4.20 level.
