The Midnight (NIGHT) market is clearly polarized: Derivative are creating short-term downward pressure, while spot money continues to accumulate and maintain an upward scenario.
The 24-hour volume on NIGHT dropped sharply, but data suggests this may be a Capital rotation rather than a complete withdrawal. Indicators such as Open Interest, Funding Rate, A/D, and liquidation heatmap help clarify which side is dominant on each timeframe.
- Night volume fell 50% to $3.97 billion in 24 hours, reflecting weakening short-term sentiment.
- Derivative are under pressure as Open Interest decreases by 12% and the Open Interest-weighted Funding Rate turns negative.
- Spot continues to accumulate strongly; the liquidation heatmap suggests a higher probability of a pullback to the higher liquidation zone.
The volume and market Capital for the night indicate that short-term selling pressure is prevailing.
Over the 24 hours, NIGHT's volume decreased by 50% to $3.97 billion, while market Capital saw a net increase but still declined from $1.94 billion to $1.52 billion for the day.
A drop in volume is usually accompanied by cautious sentiment and a temporary outflow of Capital from the market. However, the context at NIGHT suggests that a "rotation" may be occurring, with spot buying still present while Derivative are increasing their defensive positions.
The number of investors also fluctuated: from an all-time high of 6,880 down to 6,210, then further touching 6,110 on December 20th before recovering to 6,500. This development suggests that long-term demand has not disappeared, but short-term sentiment is easily disrupted by Derivative volatility and liquidation.
During the same period, NIGHT's market Capital at one point increased by $430 million. However, the fact that market Capital still experienced a sharp decline during the day (from $1.94 billion to $1.52 billion) indicates that short-term selling pressure prevailed at the time the data was recorded.
Derivative are putting downward pressure in the short term.
Derivative data leaned towards the sell side, with Open Interest decreasing by 12% (equivalent to $12.7 million leaving the market) and the Open Interest-weighted Funding Rate turning negative.
Open Interest (OI) decreased to approximately $106 million after $12.7 million was withdrawn, indicating a narrowing of leveraged participation. A decrease in OI alone is not sufficient to conclude a downtrend, as it could also reflect traders closing positions during periods of increased volatility.
However, when combined with a negative Open Interest–Weighted Funding Rate, the signal becomes more "directional." A negative Funding Rate usually means that the number of Short contracts is overwhelmingly outweighing Longing contracts, or that Short positions are willing to pay premiums to maintain their positions. This aligns with the overall picture: downward pressure is primarily coming from perpetual contract trading.
Spot continues to accumulate strongly and reinforce long-term confidence.
In contrast to Derivative, the spot market continued to pump Capital into the night market: at one point, investors spent $3.24 million buying, and the total spot purchases over the 5 days reached $301 million.
In the early hours of December 23rd, $3.24 million was recorded as being used to buy NIGHT on spot. Over the past five days, the total spot purchase volume reached $301 million, reflecting significant accumulation of capital amidst generally negative sentiment.
This accumulation level typically implies long-term expectations and, in terms of supply and demand, can "tighten" the circulating supply if Token are withdrawn from the ready-to-sell zone. This is a factor that can lay the groundwork for upward movements when demand increases again or when Short sellers are forced to close their positions.
Historical data on a 1-week timeframe shows that weekly buying activity has previously been accompanied by a 67% price surge. While not guaranteed to repeat, this correlation underscores the importance of spot money flow to NIGHT's price structure.
The Accumulation/Distribution (A/D) indicator also only showed a slight correction and remains inclined towards accumulation. At the time of recording, the total Volume on A/D was 357 million and remained positive, reinforcing the argument that spot buying is still absorbing supply.
The liquidation heatmap supports an upward scenario as liquidation is concentrated above the price.
The liquidation heatmap shows denser clusters of liquidation above the current price, while there are no significant clusters below, increasing the probability of a price "pull" up.
On a liquidation heatmap, liquidation clusters above the price often act as "price magnets" because when the price approaches these areas, stop-loss and liquidation orders can trigger further volatility, pushing the price further in the direction of the liquidation.
The lack of large liquidation clusters below the current price reduces the likelihood of a deep pullback for liquidation. If the liquidation structure remains unchanged and spot buying continues, NIGHT has a higher probability of moving up to higher liquidation zones.
Combined with accumulated spot data, the recent correction can be XEM as a temporary technical rebound rather than a trend reversal. The bullish scenario will become clearer if Short pressure on Derivative weakens or is squeezed as prices move into higher liquidation zones.
Conclude
Current data shows a tug-of-war: Derivative are putting pressure as Short positions increase and leveraged funds are withdrawn, while spot trading continues with large-scale net buying. If the liquidation cluster above remains thick and spot buying continues, the probability of NIGHT continuing its upward trend remains, although short-term volatility may still be strong.
Frequently Asked Questions
Is a 24-hour nighttime drop in volume an absolute bad sign?
Not necessarily. A 50% drop in volume to $3.97 billion suggests a short-term cooling, but could reflect Capital rotation. Further comparison with spot data, Derivative , and accumulation indicators is needed to assess the overall trend.
What does a negative Open Interest-weighted Funding Rate indicate?
When this indicator turns negative, the market usually leans towards the Short side: the number of Short positions may outweigh Longing positions, or Short positions may accept paying premiums to hold their orders. This signals downward pressure in the short term, especially when accompanied by a decrease in open interest (OI).
Why is buying a strong spot important in an overnight price trend?
Spot buying reflects real demand and is not solely based on leverage. Total spot buying over 5 days reached $301 million, and the A/D ratio remains positive ($357 million), indicating that supply absorption is present, which could support prices and increase the risk of a Short squeeze.
How does a heatmap liquidation support an upward trend scenario?
When liquidation clusters are concentrated above the price, the price tends to be drawn upwards to "sweep" those areas. If there is a lack of large clusters below, the risk of a sharp decline may be relatively lower, thus favoring an upward scenario if other conditions do not worsen.
