Key takeaways
- CAKE rises 4.5%, approaching the psychological $2 level.
- Derivatives data support the recovery as funding rates turn positive.
Derivatives data for CAKE back the upward price move
CAKE, the native token of the PancakeSwap exchange, gained 4.5% in the last 24 hours and is now trading near $2.00.
The rally coincided with weighted open interest funding rate data from Coinglass showing that fewer traders are betting on further downside for CAKE than those expecting a price rise.
A positive funding rate means more traders are optimistic on CAKE than bearish. The metric turned positive on Wednesday and currently reads 0.0046%, indicating longs are paying shorts.
Additionally, Coinglass’s long-to-short ratio for CAKE stood at 1.11 on Thursday, nearing a one-month high. A ratio above one signals that more traders are positioned for CAKE to move higher.
The bullish backdrop followed PancakeSwap’s announcement earlier this week that the community approved a proposal to reduce CAKE’s maximum supply.
The cap was lowered from 450 million to 400 million, with token burn levels consistently outpacing new issuance.
CAKE could climb toward $2.10
The 4-hour CAKE/USDT chart shows a recent downtrend, even as CAKE added 4.5% over the past day.
CAKE was rejected at the weekly resistance around $2.13 on Saturday and fell about 10% earlier in the week. It bounced back on Wednesday and is once again approaching the $2.00 mark.
If CAKE sustains its recovery, it could test the 50-period exponential moving average (EMA) on the 4-hour chart, near $2.06.
The 4-hour Relative Strength Index (RSI) reads 46 and is pointing upward toward the neutral 50 level, suggesting that downward momentum is fading. For a sustained rally, the RSI needs to rise above neutral.
Conversely, if CAKE’s daily candle closes below the $1.88 support level, the token could extend its correction toward the next support zone near $1.79.