Raydium is overbought but could still rally if this happens

Raydium (RAY) has experienced a significant rally over the past month, soaring 83%, with a notable 33% gain in just the last seven days. The token, which serves as the native asset for the Solana-based automated market maker (AMM), reached a 31-month high of $3.59 earlier today, a level not seen since April 2022.

Despite a small dip in recent hours, Raydium is currently trading at $3.25, which represents an 81% decline from its all-time high of $16.93 on September 13, 2021.

With a market cap of $858 million, Raydium is the 75th-largest digital asset by market capitalization.

The token’s funding rate suggests that there is still potential for further upward movement, even though it is currently in the overbought zone following its strong rally.

Can RAY rally again?

According to data provided by Santiment, Raydium’s Relative Strength Index is sitting close to the 80 mark. The indicator shows that the asset is overbought and potential profit-taking could be on the way.

Raydium (RAY) has seen a significant 65% increase in its total open interest over the past day, rising from $4.5 million to $7.4 million, according to data from Santiment.

A surge in open interest often leads to higher price volatility, as it increases the likelihood of liquidations. In this case, the rise in open interest is primarily driven by traders betting on a price decline for RAY. Santiment’s data shows that the token’s funding rate shifted from 0.06% on October 26 to -0.06% at the time of reporting, indicating a rise in short positions.

If short liquidations begin to escalate, Raydium could experience another bullish momentum. However, the increasing open interest, combined with a high Relative Strength Index (RSI), suggests heightened volatility as the market remains uncertain, signaling that significant price movements are possible in either direction.