IOTA Moves 40%+ After $100M Ecosystem Foundation Announcement
Iota, an open source distributed ledger focused on the Internet of Things, saw the birth of the IOTA token rally 43% on November 29 after announcing the creation of the Iota Ecosystem DLT Foundation and its registration in the capital city of Abu Dhabi. United Arab Emirates. This makes Iota the first distributed ledger technology platform to operate in the Abu Dhabi global market.
According to the press release from the project, the foundation will invest 100 million dollars in IOTA tokens, which will be distributed over a period of four years. Traders clearly saw the announcement and funding plan as a short-term crash trigger.
Historically, the ecosystem and developer incentives provided by blockchain and DeFi protocols have increased the liquidity of the project and the sentiment of market participants.
In August 2021, the Avalanche AVAX (AVAX) token went on a 1,400% tear following the announcement of the Avalanche Rush decentralized finance (DeFi) incentive program.
A similar effect was seen in Trader Joe's JOE token in the months leading up to December 2022, after the DeFi protocol announced plans to go on arbitrage.
Currently, the Arbitrum ecosystem is hosting liquidity and developer incentives, and these initiatives coincide with the recent 62% rally in the ARB token price.
Was the IOTA price another news selling event?
In the year On November 30, crypto derivatives data provider Coinalize tweeted the following IOTA chart, noting that IOTA's “fund size and long/short ratio” were at “historic lows.”
$IOTA
Funding rate and long/short ratio at historic lows! pic.twitter.com/wloZNoLMxu
— Coinalyze (@coinalizetool) November 30, 2023
Traders often interpret funding and long-to-short ratios as measures of sentiment and indicators of how active investors are. In this context, traders perceive low funding to reflect a crowded short position, and in these situations, positive news or a price event can quickly trigger a rapid price change that squeezes short traders out of their positions.
A comparison of Coinalyze's chart with a standard candlestick daily chart reflects this dynamic, especially the large volume of the Buy candle on November 29th.
Aside from the recent price divergence, IOTA's price has been trading at multi-year lows, and on the weekly time frame, the chart shows some lack of interest in the project from the perspective of traders.
Cryptocurrencies have a long history of seeing price spikes leading to mainnet upgrades, multichain expansions, currency announcements, and developer incentives. Only time will tell if this is the case for IOTA.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
