IOTA on the Edge: Will It Survive the Crypto Market Storm?

IOTA has recorded a modest 6% gain over the past week. While this may seem like a positive sign, technical indicators suggest a potential bearish trend may be forming. A looming reversal pattern on the charts signals a possible downturn if bullish momentum fails to pick up. This bearish flip could trigger a sharp price drop, aligning with the broader weakness observed in the cryptocurrency market.

Market Sentiment: Weakness Across the Board

The wider crypto environment still grapples. Large cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), and Solana (SOL) are only just holding onto gains, trading merely in the positive. Although there is the occasional pop among some altcoins, the general mood remains nervous. A lot of this is because macroeconomic issues persist—chiefly ambiguity over global tariffs—causing many investors to take profits in advance.

This risk aversion environment has led to constant selling pressure, particularly in the futures market. Bitcoin, for example, will drop back to the $80,000 support level if such pressure persists.

IOTA’s Current Price Action

As of today, IOTA is trading around $0.16, marking a gain of less than 1% in the past 24 hours. However, this slight uptick doesn’t tell the whole story. The altcoin is forming a descending triangle pattern—a classic bearish indicator. This setup suggests that unless buyers step in to shift momentum, the price could tumble.

A drop below the current support could embolden sellers to push IOTA down toward the $0.13 mark. If this level breaks, the next stop could be below $0.10—a concerning scenario for bullish investors.

Trouble Brewing in the Derivatives Market

The warning signs are not limited to spot price charts. Derivatives data point out that IOTA may be in worse trouble. One of the key red flags is the condition of the funding rates in the futures market. These rates are moving towards negative levels, which means that bearish sentiment is increasing among the traders.

Negative funding rates happen when short sellers overwhelm long buyers, generally anticipating a near-future price decrease. This is one of the most important indications that a lot of traders anticipate IOTA to decrease.

Stagnant Open Interest Raises Further Doubts

Another concerning factor is IOTA’s stagnant open interest. Open interest refers to the total number of outstanding futures contracts and often reflects market participation and enthusiasm. Since early 2025, IOTA’s open interest has remained largely flat, suggesting a lack of confidence among leveraged traders.

The combination of flat open interest and declining funding rates paints a rather bleak picture for IOTA in the short term. Unless market conditions shift or a catalyst emerges to inspire buyers, the token may continue to face downward pressure.