USELESS Coin up 12% as leverage rises sharply – Will it hold above $0.07?

Towards the end of last week, memecoins saw a resurgence in their prices. As expected, this sparked a slight return in Open Interest (OI) too.

For instance, $USELESS Coin gained by over 12% in just 24 hours, turning weekly losses to gains of about 5%. Its resurgence also coincided with the likes of $FARTCOIN, $BONK, and dogwifhat [$WIF], among others.

$USELESS Coin’s market leverage outpaces other memecoins

That’s not all either as the notional value of outstanding derivatives contracts for $USELESS Coin is up immensely on both CEXs and DEXs.

At the time of writing, $USELESS had the highest OI-to-market-cap ratio of 11.86% of any memecoin on Binance perps. Its OI was $8.30 million, and the market cap was $70 million. It was followed by $FARTCOIN, $TRUMP, and $WIF.

On DEXs like Lighter, which is the biggest to list $USELESS, it seemed to have more perps OI than literally every other memecoin except $TRUMP.

The data from both CEXs and DEXs appeared to have excessive market leverage in the memecoin. That observation indicated that leverage may have driven the day’s rally.

However, when OI becomes disproportionately large, the market is highly vulnerable to rapid deleveraging events, liquidation cascades, or severe price squeezes.

Explosive buying volume as bulls defend key levels

The spike in leverage is evident with explosive buying volume. It increased by 9.9x over the last 24 hours, driving the price higher with it. Furthermore, a short squeeze at $0.07065 amplified the uptrend to the day’s peak of $0.07745.

These were strong bullish indicators, even though there may be risk of a price crash if leverage is withdrawn.

Additionally, bulls have been defending key levels, as seen in the liquidity clusters. These levels were at the highest liquidation leverage clusters, which were located at $0.070.

Will $USELESS hold above the $0.07 neckline?

$USELESS broke above a bullish reversal pattern on the 4-hour chart. However, it still traded below an ascending trendline support, which was now a resistance.

After such a parabolic move, the prices tend to retrace, which $USELESS seemed to be doing at the $0.070-level. The retest might pass though, as the Chaikin Money Flow (CMF) was rising with a reading of 0.16. This alluded to bulls buying at $0.070.

$USELESS Coin, at press time, was also in alignment with established memecoins like $BONK, with a Correlation Coefficient of 0.73.

Therefore, if the price breaks below $0.070, it would invalidate the bullish scenario. That would mean further downside, but a reclaim of the trendline would affirm the bullish reversal.

Final Summary

• $USELESS Coin surged by 12% in the last 24 hours amid high market leverage on the buy side.
• The memecoin’s price action could be in the middle of a bullish reversal, but it is yet to be confirmed.