NEAR Price Faces a Critical Test – Why Is NEAR Protocol Plunging?

The $NEAR Protocol price has drawn significant attention recently after smashing its yearly high at $6. Since then, the token has faced renewed selling pressure, attracting more than an 8% loss in the past 24 hours. The decline has brought the price closer to its pivotal support zone, putting its recent recovery at risk. As momentum weakens, investors are watching whether buyers can defend support or the rally will face the next local support below $4.

Why is the $NEAR Protocol Price Falling?

The crypto markets have been experiencing significant downward pressure that has pushed the Bitcoin price below $80,000. This has pushed the $NEAR price from $5.2 to levels below $4.2, with the latest candle breaking the support zone between $4.45 and $4.39. But what made the price drop below the crucial support? Here are the 3 main reasons that caused the fall.

The Global Risk-off Sentiment

The FED held interest rates at 3.75% to 4%, while maintaining a hawkish stance and highlighting concerns about rising inflation rates. This decision is believed to have rattled investors as they foresaw the possibility of a tighter monetary policy. On the other hand, the AI sector also experienced a strong correction, impacting AI- and big>Alphabet’s earnings intensified concerns about heavy spending on AI that drove the company’s shares down, erasing nearly $400 billion. Meanwhile, the technology sell-off hurt the hedge funds across multiple strategies, with META dropping by 7%, Nvidia by 4%, and the Nasdaq Composite by 2.6%. Hence, this can be considered a crypto market sell-off on the whole, rather than a $NEAR price correction.

Derivatives Deleveraging is Amplifying the Move

The $NEAR Protocol open interest has reached a peak in recent times of $1.92 billion in the first fortnight of the month. However, the futures have experienced substantial position reductions since then, reaching levels around $1.33 billion.

The $NEAR open interest has fallen around 9.5% in the past 24 hours, along with the price, which dropped below the pivotal support. Besides, significant long liquidations have been documented, which are believed to trigger a sell-off. This matters because when leveraged traders are forced to close long positions, their selling intensifies the downtrend.

$NEAR ETF Flows Show Signs of Cooling Investor Interest

$NEAR Protocol’s investment-product flows suggest that investor interest has cooled in the past few days. The chart shows strong inflows of around $36 million in the last few days of September, followed by $14 million during the monthly close & $8 million to open the month’s trade. Since then, fresh inflows have been considerably smaller.

The chart also shows two significant outflows, with the recent one reaching $5 million. This could point to profit-taking or weaker demand. Therefore, if outflows continue, they could weigh on sentiment as traders watch $NEAR’s key support levels.

$NEAR Price Analysis: $4 Support in Focus

$NEAR Protocol is showing signs of weakening momentum after retreating from its October peak near $6. The token is trading around $4.413, down by 8.09%, with the price approaching the horizontal support zone around $4.08. A daily close below this level could expose the next support near $3.88.

The RSI has been maintaining a steep downtrend, suggesting that bearish momentum is gaining ground. Meanwhile, the latest negative Cumulative Volume Delta (CVD) shows aggressive selling. If buyers defend $4.08, $NEAR could attempt a recovery towards $4.70 to $4.75. However, a confirmed breakdown below the support would strengthen the bearish outlook.

What’s Next for $NEAR Protocol Price?

$NEAR Protocol’s near-term outlook will depend on broader crypto-market sentiment and whether buying interest returns after the recent sell-off. Slowing investment-product inflows and uncertainty across the broader crypto market could keep pressure on the token. Traders should watch Bitcoin’s next direction and changes in derivatives activity for signs of whether selling pressure is easing. Until the market shows clearer signs of recovery, the $NEAR price could remain vulnerable to further volatility.