Jupiter (JUP) Falls Over 10% as Spot and Derivative Liquidity Outflows Trigger 14.84% Open Interest Drop

Jupiter (JUP) experienced a sharp decline of over 10% as liquidity outflows from spot and derivative markets intensified, sparking speculation about potential reversal signals. The token’s price dropped to $0.5675 at press time, trading slightly above its 20-day moving average (MA) of $0.5431, where a green candle hinted at a possible short-term rebound. Technical indicators, including the Money Flow Index (MFI) at 62.70 and a narrowing MA ribbon, suggest buyers may still hold influence despite the volatility [1].

The 20-day MA, often a critical support/resistance level, currently appears to act as a buffer for JUP. Historically, price tests near this level have triggered corrective bounces, especially when MFI remains above 50, indicating positive liquidity inflows. However, the sustainability of any rebound depends on activity in both spot and derivative markets, which have shown mixed signals. Open Interest in derivatives fell 14.84% to $171.52 million, a sharp decline coinciding with the price drop and signaling potential strategic exits by buyers [1].

Derivative market sentiment remains divided. While Open Interest contraction suggests reduced speculative positioning, the Open Interest Weighted Funding Rate held a positive 0.0027%, favoring long positions. This rate, though declining, still reflects bullish dominance, contrasting with the bearish price action. A shift to negative funding rates could trigger further liquidations, exacerbating downward pressure [1].

Spot market dynamics reinforce downside risks. Over $1.18 million in JUP was sold within 48 hours, reflecting a shift from long-term to short-term sentiment as traders anticipate further declines. Prolonged outflows could amplify JUP’s vulnerability, especially if derivatives markets fail to stabilize. Analysts note that the interplay between spot and derivative markets often creates feedback loops, amplifying trends through margin calls or liquidations [1].

The AMBCrypto analysis highlights the MFI’s oversold condition as a potential near-term support signal, though it cautions against treating it as a standalone buy cue. Similarly, the MA ribbon’s tightening—a historical precursor to volatility reduction—does not guarantee a reversal, particularly in a market sensitive to macro crypto conditions and liquidity shifts [1].

Fundamental factors, such as Jupiter’s ecosystem activity, have not changed significantly to justify a reversal, underscoring the importance of balancing technical analysis with on-chain metrics and adoption trends. While the current signals offer cautious optimism, sudden reversals in leveraged markets remain volatile and unpredictable.

The market’s response to these indicators will depend on broader crypto sentiment, regulatory developments, and liquidity dynamics. Traders are advised to adopt risk management strategies given the high leverage and interconnectedness of spot and derivative markets.

[1] AMBCrypto, "Jupiter cracks 10% lower: Will 2 signals help JUP flip the trend?" https://ambcrypto.com/jupiter-cracks-10-lower-will-2-signals-help-jup-flip-the-trend/