Today, the Layer-1 blockchain coin IP has captured significant attention within the market due to an impressive over 10% price surge, making it the top performer across the cryptocurrency landscape over the last 24 hours. This movement occurred amidst a broader market environment characterized by relative stagnation, with the majority of assets either remaining stable or experiencing only slight declines. Despite this upward momentum, the rally has been accompanied by a notable uptick in short interest, which may imply that this price increase could be a short-lived \"dead cat bounce,\" a term used to describe a temporary recovery before further declines.

Currently trading at $2.89, IP has recorded a 15% increase over the past day. Although this performance contrasts with the general market downturn, derivatives traders remain cautious. On-chain metrics indicate that numerous participants are anticipating a potential price drop, even as the asset continues to climb. According to Coinglass, IP's funding rate has dropped to -0.62%, marking its lowest point in more than four months. This shift in sentiment suggests that a substantial number of traders are now taking positions against the current rally.

Funding rates represent periodic payments exchanged between long and short traders in perpetual futures markets. A positive funding rate implies that long positions—those wagering on rising prices—are dominant, and long traders compensate short traders to maintain their positions. Conversely, a negative funding rate signifies that short positions are prevalent, reflecting bearish sentiment as traders anticipate falling prices.

The sharp decline of IP's funding rate to a multi-month low underscores a heightened sense of bearish conviction among market participants. This suggests that many traders are heavily betting on a downward trajectory in the near future, despite recent price improvements. The rationale behind this skepticism is straightforward: numerous traders believe the current rally is unsustainable, particularly given escalating geopolitical tensions in the Middle East.

Furthermore, the coin's negative Balance of Power (BoP) on the daily chart aligns with this bearish perspective. At the time of writing, this momentum indicator stands at -0.70 and is trending downward. The BoP indicator assesses the relative strength of buyers versus sellers in the market, aiding in identifying shifts in momentum. Negative values indicate that sellers are dominating buyers, potentially leading to additional price drops.

At its present valuation, IP is trading above a crucial support level established at $2.78. Should demand weaken and the coin experience a correction, it might breach this level and descend toward $1.90. If the bullish forces fail to uphold this support, the IP token price could revisit its historical low of $1.36.

On the other hand, should the asset attract renewed buying interest, it could bolster its ongoing rally and advance toward $3.89. This scenario would depend on various factors, including market sentiment, macroeconomic conditions, and investor confidence. As always, the cryptocurrency market remains highly volatile, and traders are advised to monitor developments closely while managing risks accordingly.

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