SPX6900 Plummets 10% as Short Selling Surges

On the 1st of July, SPX6900 [SPX] experienced a significant drop of over 10%, extending its weekly loss to 7.25%. This sharp decline was driven by an aggressive surge in short positions, indicating that derivatives traders were heavily betting against the memecoin. The Funding Rate on CoinGlass plunged into negative territory, registering at -0.0183%, which signaled that traders were aggressively shorting the asset and paying a periodic premium to maintain those positions.

This increase in short activity coincided with a decline in Open Interest, which dropped 7.16% to $113.02 million. The decline reflected capital exiting both long and short contracts, but liquidation data revealed that $176,010 out of the $199,030 liquidated came from long traders caught on the wrong side of the move. This data suggested that the market was heavily influenced by short selling, which contributed to the downward pressure on SPX.

Despite the bearish sentiment and price decline, accumulation continued in the spot market for four consecutive days. CoinGlass Spot Exchange Netflow revealed that investors have been purchasing SPX and transferring it into private wallets for long-term holding. During this period, $2.83 million worth of SPX was accumulated. However, data shows that spot purchases have sharply declined, falling from $1.83 million on the 30th of June to just $87,000 on the 1st of July. This drastic difference suggested that spot investors may be anticipating further downside or have shifted their attention elsewhere.

Technical analysis showed that SPX traded at a key support level within a broader bullish symmetrical triangle. The memecoin was at $1.1720, and a breakout from this pattern could trigger a 27% rally toward $1.6413, the upper boundary of the triangle. However, a bullish breakout remains unlikely given current market indicators. The Relative Strength Index stood at 47.91 and trended downward. An RSI below 50 signals that selling pressure is dominant. If price revisits the lower support near $1.0858, a decisive close below could flip the structure completely. On top of that, retail exhaustion may delay any strong recovery. A revisit to $1.08 might offer a better re-entry point for sidelined bulls.

Overall, the market maintains a bearish stance. Although support levels are in play, sentiment and technical indicators suggest a further decline may occur before any substantial rally materializes. A rebound may depend on whether retail spot investors can generate enough demand to stabilize the market. If spot traders can accumulate enough SPX to create a demand surge, it could potentially reverse the current downward trend. However, the current chart structure signals that buyers could still face deeper losses ahead, and further price declines could still benefit the memecoin.