Wormhole drops 34%: Are W crypto shorts now overcrowded?

Wormhole [W] declined 34% in the past day as broader market volume surged, according to CoinMarketCap data.

In the spot market, rising volume with falling price usually points to stronger selling momentum. That setup warned that Wormhole’s downtrend could continue in the short term.

However, the perpetual market was telling a slightly different story. The Long/Short Ratio showed which side controlled more perpetual market volume. A reading above 1 suggested buying dominance.

At press time, perpetual market volume had exceeded $1.06 billion over the past 24 hours. The Long/Short Ratio stood at 1.05, showing a moderate bullish tilt. Over the past 4 hours, nearly 51% of market volume also favored bulls.

So, the first split was clear. Spot traders were selling hard, while perpetual traders were not fully bearish yet.

Is W’s Funding Rate warning traders?

The perpetual market still had buying volume, but the deeper positioning looked weaker. The Funding Rate warned of an extreme short bias in the W market.

At press time, the Funding Rate had dropped to around -0.0436% on the chart.

A deeper move below the positive baseline showed that traders were heavily positioned short. This reading covered the past 24 hours and pointed to aggressive bearish exposure.