The native token of decentralized exchange (DEX) aggregator 1inch (1INCH) experienced a significant surge of over 58% in value, accompanied by a surge in trading volume to $597 million, the highest level since October 2021. However, the token’s rally later receded.

The surge in trading volume also resulted in the liquidation of $3.37 million in leveraged 1inch short positions within the past 24 hours, as reported by CoinGlass.

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While there doesn’t seem to be an immediate news catalyst for this movement, 1inch’s rally appears to be continuing the positive trend set by XRP after its recent legal victory against the Securities and Exchange Commission (SEC). XRP witnessed a 102% surge in value within a single day, which subsequently triggered movements in other assets like Solana (SOL), Cardano (ADA), and Polygon (MATIC).

Interestingly, open interest, which measures the total value of open derivatives positions, has surged from $14 million to $125 million across 1inch trading pairs, as observed by Coinalyze. This suggests that the rally has been fueled by activity in the futures markets.

However, this surge in trading volume and open interest has created a delicate market dynamic. Market depth, which measures liquidity over a 2% spread, remains relatively low compared to the trading volume. On Binance, for example, the buy-side market depth of 1inch is currently $226,272, according to CoinMarketCap. This situation can potentially prompt a cascade of long position liquidations if spot sellers take advantage of leveraged trading activity.

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One notable 1inch investor seems to be capitalizing on this trading strategy. Blockchain sleuth lookonchain discovered that an investor transferred 7 million tokens, valued at $3.7 million, to Binance. Subsequently, the token’s price fell by 4.4% in just a few minutes following the transfer.

As of now, 1inch is trading at $0.505, retaining a 23.8% gain in the past 24 hours, despite some loss of its earlier gains on Monday morning. Between 9:00 AM UTC on Sunday and 9:00 AM UTC on Monday, 1inch saw a remarkable increase of 58.26% in value, according to data from TradingView.

The surge in the 1inch token’s value and trading volume, along with the associated market dynamics, highlights the volatile nature of the cryptocurrency market. Investors and traders are closely monitoring these developments as they seek to capitalize on potential opportunities while navigating the risks inherent in such price movements.

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Written by Agbo Obinnaya

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