The price of Berachain has surprised the cryptocurrency market with a sudden and steep rise. BERA soared to about 210% from its intraday peak on Wednesday before showing signs of a pullback.
This explosive movement has drawn significant attention to the market. However, on-chain data indicates that this rally was driven by speculative sentiment rather than sustained capital inflow.
What caused the surge in BERA's price?
The main reason for the BERA rally seems to be a massive short squeeze. Short-selling investors were caught off guard, causing the funding rate to fluctuate dramatically. According to reports, the funding rate dropped to as low as -5,900%, indicating extreme imbalance in the derivatives market.
With the liquidation of short positions, the 24-hour trading volume surged to $2.23 billion. Forced buying increased market volatility and accelerated price rises. While short squeezes can lead to rapid price increases, they rarely provide structural support for long-term cryptocurrency price trends.
The Chaikin Money Flow (CMF) indicator provides important insights into the macro momentum of Verachain. Despite the dramatic price rise, the CMF remained below zero. This signal indicates that capital outflows have consistently overwhelmed the asset during the rally.
Additionally, the chart also showed a downward divergence. The BERA price formed a higher peak, but the CMF recorded a lower peak. Such divergence often indicates a price correction as the bullish trend fails to be validated due to a slowdown in capital inflow. This structure increases the likelihood of further short-term downward pressure.
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According to derivatives data, long position investors currently appear to be exposed to higher risks. As price momentum weakens, the risk of liquidation for leveraged long positions has increased. The market heatmap shows that large-scale long liquidations are concentrated just above $0.620.
If the price falls below $0.626, approximately $5.26 million in long positions could be liquidated. A chain reaction of liquidations can quickly amplify the downward pressure on volatile altcoins. If selling pressure increases, the losses for individual investors maintaining aggressive long positions could widen.
As of the time of writing, the BERA price is trading at $0.823. Following a surge of about 210% from the intraday high on Wednesday, bullish expectations have quickly cooled as the surge has subsided. The price retracement suggests that momentum investors have begun to realize profits.
Given that this surge has a speculative nature and a CMF divergence has been confirmed, the possibility of further declines seems high. If the support level of $0.795 is clearly broken, BERA could drop to $0.620. This decline could activate previously identified liquidation clusters, leading to losses up to $0.438.
Conversely, if investor confidence recovers, prices could stabilize around $0.795. If capital inflow strengthens and speculative buying pressure subsides, BERA could rebound to $1.077. If it continues to rise in that range, the bearish scenario would be invalidated and upward momentum could recover.
