IMX Price Prediction: Short Traders Should Brace For Losses

The value of IMX, the native token of ImmutableX, the Layer 2 (L2) scaling solution for NFTs on Ethereum, has risen by 22% in the last week.

Layer 2 (L2) scaling solution for NFTs on Ethereum, ImmutableX, has seen a 22% increase in the price of its native token, IMX, over the past week.

This price uptick has led to increased activity in the token’s derivatives market, but there’s a catch.

IMX Open Interest Surges

IMX currently trades at $1.58 at press time. A surge in the L2 market has caused the token’s price to increase by double digits over the past week. This has led to a surge in activity in its derivatives market.

The token’s open interest is $23 million at the time of writing. This rally in open interest began on July 7 after it fell to a year-to-date low of $14 million.

Since then, IMX’s open interest has increased by 39%. It now sits at its highest level since June 6, according to Santiment’s data.

An asset’s open interest is the total number of outstanding derivative contracts, like options or futures, that haven’t been settled. When it spikes like this, it shows that more traders are entering new positions, bringing fresh liquidity into the market.

However, many of the new entrants into the IMX derivatives market have been demanding short positions. This can be seen in the predominantly negative funding rates recorded since July 6.

Funding rates are a mechanism used in perpetual futures contracts to keep an asset’s contract price close to its spot price. When they’re negative, it indicates that more traders are betting on a decline in the asset’s price than traders who are buying the asset and hoping for a rally.

IMX’s funding rate across cryptocurrency exchanges is -0.001% at press time.

IMX Price Prediction: Short Traders May Face Losses

IMX’s 20-day Exponential Moving Average (EMA) has recently been breached to the upside by the token, suggesting that it may continue to rally.

An asset’s 20-day EMA is its average price over the past 20 trading days. When the price rallies past this level, it shows that the uptrend is gaining strength as the shorter-term price action is starting to outpace the average of the past 20 days. This breakout is often used by traders and investors as a buy signal.

If buying pressure persists, IMX could rally to $1.75.

However, if profit-taking occurs and IMX begins to trend down, it may trade as low as $1.13.

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