JUP fell sharply due to the sell-off of long-term investors, causing Capital withdrawal of 128 million USD and TVL to plummet, while recovery signals still existed through holder income and liquidation cluster.
Derivative pressure is increasing as the funding rate is negative at -0.0203%, but Spot Trading and holder net income are improving, suggesting a possible pullback towards liquidation zones near $0.35.
- Large-scale sell-off drags JUP down 15%, outflow of 128 million USD reduces TVL to 2.92 billion USD (defillama).
- Funding rate OI -0.0203% shows the dominance of sellers; Spot Trading recorded buys around $312,000 (CoinGlass).
- Q4 holder net income reached 26.33 million USD after 45 days, just behind Q3's 51.94 million USD, with a liquidation cluster of nearly 0.35 USD supporting the recovery possibility.
JUP fell sharply due to sell-off by long-term investors
JUP price plunged mainly due to a massive sell-off from long-term holders, amid a decline in the total cryptocurrency market Capital to $3.2 trillion.
According to defillama, JUP recorded a net Capital of about $128 million, bringing its TVL down to $2.92 billion. This decline reflects weakening long-term confidence and reduced short-term Staking benefits. At the same time, JUP's price fell about 15%, amplifying the overall market pessimism.
Capital pressure often has a ripple effect: liquidation , opportunity costs increase, and risk appetite declines. As more positions are unlocked, supply pressure can persist unless there is a balancing buying force from spot or long-term funds.
“Cryptocurrencies are becoming a safe haven. In many ways, they are digitizing gold.”
– Larry Fink, CEO BlackRock, interview with Fox Business, October 16, 2023, Fox Business
Negative funding rates confirm bears' dominance in the Derivative market
JUP's Open Interest Weighted Funding Rate turned negative at -0.0203%, indicating that sell contracts are overwhelming buy contracts in the same time frame.
When funding rates remain negative, short position holder pay a premium for long positions, reflecting the expectation that prices will remain under pressure. This dynamic often coincides with corrections, or when many leveraged positions are tilted in one direction (CoinGlass data).
According to the Derivative knowledge guide, negative funding rates are often accompanied by perpetual contract prices trading lower than spot prices, reinforcing the market's defensive bias. This is consistent with the picture of falling TVL and cautious sentiment after the sell-off.
“When funding rates are negative, Short positions pay a premium for Longing positions and perpetual contract prices are typically lower than spot prices.”
– Binance Academy, What Is a Funding Rate?, 2023, Binance Academy
Spot Trading and holder income are creating support for JUP
Despite the pressure, quarterly data showed that the net income of the JUP holding group in the fourth quarter exceeded the beginning of the year and was only behind the third quarter.
At the time of recording, the total income of this group reached 26.33 million USD after 45 days of Q4, behind the 51.94 million USD mark of Q3. This trend suggests that smart Capital can consider re-entering when the valuation is attractive, despite the short-term decline in TVL (source: aggregated market data).
In the spot market, CoinGlass recorded about $312,000 spent on JUP purchases during the decline. The modest volume reflects caution, but also implies the possibility of accelerated disbursement when the trend reversal signal becomes clearer.
Liquidation cluster shows probability of technical recovery
The liquidation heatmap shows that the market could still see a rally targeting nearby liquidation clusters.
Specifically, thin liquidation clusters can attract price movements towards them even without forming a sustained trend. From the current ground, the market structure favors a technical pullback to sweep liquidation before choosing the next direction (source: CoinGlass).
The most notable cluster is around $0.35, although liquidation in this area is still thin. If spot buying improves and funding rates become less negative, the probability of price moving up to test this liquidation zone will increase, before the market decides on the medium-term trend.
Macro factors continue to amplify JUP volatility
JUP was affected in tandem with the general market as the cryptocurrency Capital fell to $3.2 trillion, weakening risk appetite.
High beta assets like JUP are more volatile than the general market amid periodic tightening of global liquidation conditions. ETF Capital , inflation data, and interest rate expectations can indirectly impact flows into and out of protocols, thereby amplifying volatility in both spot and Derivative markets.
Investors often monitor Capital flow reports, interest rate movements and leverage positioning to assess the new equilibrium. When synchronization signals appear, the probability of a sustainable reversal is higher than that of individual technical pullbacks.
Points to watch to confirm JUP's recovery scenario
A sustainable recovery scenario requires funding rate to be close to 0 or slightly positive, TVL to stagnate and reverse, and spot volume to increase.
Key metrics include funding rate and perp-spot price deviation (CoinGlass), Capital /outflow and TVL (defillama), and quarterly net income per holder . Simultaneous improvement in all three indicators reduces the risk of a Bull Trap.
Additionally, observing newly formed liquidation clusters and liquidation sweep dynamics around $0.35 will indicate whether demand is truly returning, or if it is just a short-term supply test before the downtrend continues.
Frequently Asked Questions
Why did JUP's TVL decrease sharply?
Due to the sell-off of long-term investors, it led to an outflow of about $128 million, bringing TVL down to $2.92 billion, in the context of the general market weakening to $3.2 trillion (defillama).
What does a funding rate of -0.0203% mean?
Negative funding rate shows that Short are dominant and willing to pay premiums for Longing, implying that downward pressure is still present (CoinGlass, Binance Academy).
What does holder net income mean for JUP price?
Q4 net income came in at $26.33 million after 45 days, just behind Q3's $51.94 million, suggesting re-entry potential on attractive valuations, supporting recovery.
Is the $0.35 liquidation worth paying attention to?
Yes. This is the area with the largest liquidation cluster at the moment, which could attract a price test. However, liquidation is still thin, need confirmation by spot volume and improved funding rate.
Is the $312,000 spot cash flow strong enough?
Not yet. The small size reflects caution. However, this is an early sign that demand could pick up if the overall trend reverses (CoinGlass).
