Sky Protocol [SKY] recorded significant gains over the last 24 hours, with the altcoin gaining by 14% on the charts. However, while these gains appeared to be strongly bullish, they have relied significantly on sentiment.

CoinMarketCap Sentiment, which uses a scale between -10 and 10 to measure investors’ outlook for an asset, highlighted a mildly bullish outlook for SKY. According to the same, it had a reading of 1.96, suggesting that investors are likely to accumulate more of the asset without the expectation of going all out.

Worth pointing out, however, that SKY’s perpetual market activity has been supporting these price gains too, with capital flows and positions pointing to further upside.

Capital flow and positions fuel bullish odds

SKY’s perpetual market revealed that there has been some growth in its capital base.

According to Coinglass, the Open Interest surged by 27% to hit roughly $39 million at press time. A surge in the capital base is a reflection of investors’ outlook for the asset, likely determining whether the asset trends higher or eventually sees a decline.

The Funding Rate, which tracks the cost of holding perpetual positions, rose too and pointed to growing long positioning in the market.

Are Spot traders selling?

Over the past three days, there has been an established selling trend among traders in the Spot market. In fact, there has been a cumulative sell-off of $363,000. This trend seemed to be even more visible over the last 24 hours, with Netflows of approximately $788,000.

For context, positive Netflows mean more SKY is moving into exchanges for sale than out of exchanges into private wallets for long-term holding.

As it stands, the primary concern stems from the divergence between Spot and Perpetual Market positioning.

In a typically sustained bull market, there tends to be bullish positioning from both the Spot and Perpetual Markets without overbought conditions. Spot would need to begin accumulating before the trend can be confirmed as fully supportive of a sustained bull market.

What do on-chain indicators tell us?

Finally, activity in the on-chain market has been fairly relaxed, without any major significant growth in market activity.

For instance, DeFiLlama reported that SKY’s Total Value Locked (TVL) has maintained a steady path with no significant gains or drops until 17th September. On that day, it added $569 million.

This growth, however, did not coincide with the fees generated as they held steady over the past day. Simply put, the price is now likely to continue its uptrend if market activity still supports it.

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Final Summary

• SKY gained by 14% as Open Interest climbed by 27% to $39 million.

• Spot traders recorded $363,000 in cumulative selling over three days, creating a divergence between Spot and Perpetual market activity.

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