Helium crypto surges 36% – Why HNT’s rally could face a reversal

Helium [HNT] has seen a staggering 36% climb in its asset value over the past day as of writing. On a year-to-date basis, however, it is still underperforming, with a 38% loss, according to CoinGlass.

The main factor behind the recent rally has been closely linked to the protocol’s cell coverage usage across locations, including Celina, Texas, and Waimea Valley, Hawaii, where users now rely on its services to access internet connectivity.

The sentiment gauge, which measures the market outlook on a scale between -10 and 10, had a clear bullish stance with a reading of 5.6 at the time, suggesting that investors remain optimistic about the asset’s outlook.

The downside risk isn’t eliminated

The outlook from the sentiment, price, and momentum sides of the market appears bullish, but there is still a big question over whether the asset can maintain its current strength.

The perpetual market positioning for HNT suggests that the price could face a decline, as the funding rate remains highly negative. The funding rate fell to roughly -0.6954%, with about $16.94 million in positions favoring short contracts.

This implies that HNT could face a decline soon, as short-position holders continue to apply downward pressure on the price.