ASTER buyback triggers a 12% drop, revealing the market dilemma behind the $3.37 million short-term unrealized gains

ASTER closed at $0.62 on January 20, down 3.78% over 24 hours. Behind what seems like minor fluctuations, there are deep-seated issues of market structural imbalance. The buyback mechanism, just launched, experienced a 12% single-day drop, exacerbating long-short position imbalances and frequent leverage risks. All these signals point to the same problem: restoring market confidence is far more difficult than imagined.

Buyback Fails to Halt Decline, Market Confidence Still at a Cold Point

On January 19, ASTER officially launched a strategic buyback reserve mechanism, allocating 20%-40% of platform fees for targeted repurchases. This should have been positive news, but market reactions were quite tepid.

Data shows that after the buyback started, ASTER’s price accelerated downward. On January 19, it fell over 12% in a single day, briefly dropping to $0.61, hitting a record low. What does this indicate? It shows that market confidence in this measure is insufficient. Investors are likely pondering two questions: first, can the buyback truly reduce the effective circulating supply; second, is the buyback effort enough compared to the current selling pressure.

In terms of market cap, ASTER’s current valuation is about $1.6 billion, with a fully diluted market cap of $4.97 billion. This means the market needs to absorb a large influx of capital to maintain the price, and relying solely on platform fee buybacks is clearly far from enough.

On-Chain Data Reveals Intense Long-Short Battle

More telling are the position data on Hyperliquid, which reflect a serious imbalance of power among market participants.

Short positions hold an absolute advantage

Address 0xa312, labeled as “Shanzhai Short Army Leader,” holds the largest short position on Hyperliquid, worth $3.3791 million, with an unrealized profit of $2.9531 million. On January 19, this address also partially took profit, reducing its ASTER short position by 161,600 tokens.

What does this mean? Shorts have already gained substantial profits but are still holding large positions. Under such circumstances, any price rebound could trigger short covering and selling, creating a vicious cycle of “more rebound, more selling.” The existence of shorts itself exerts strong downward pressure on the price.

Long positions face extreme risk

The largest ASTER long address on Hyperliquid is even more concerning. Holding with 5x leverage, it currently has an unrealized loss of about $1.46 million (76% of its position), with a liquidation price only at $0.621.

Compared to the current price of $0.62, this long position is on the brink of liquidation. The liquidation price is only $0.001 away from the current price. This means any slight dip could trigger liquidation, leading to chain reactions of selling pressure.

Market liquidity tightening amplifies volatility

Small crypto markets inherently have relatively low liquidity. Coupled with the current severe imbalance of long and short positions, any large trade can trigger intense fluctuations. Without strong buy support, the risk for longs could easily spark panic, further accelerating declines.

Technical Analysis Shows Continued Downward Pressure

From a technical perspective, ASTER’s situation remains bleak. According to recent analysis, technical indicators on the daily chart show a complete dominance of the sellers.

Descending price oscillators and DMI indicators confirm a downtrend. While some analysts suggest a potential rebound, any bullish reversal must be predicated on ASTER regaining above $0.81 and ultimately breaking through $1.0. If the closing price falls below $0.658, it could signal further decline toward the support zone at $0.55.

In other words, the current price of $0.62 is at a critical juncture. Support is at $0.55 downward, while upward resistance exists at $0.658 and $0.81. Short-term breakthroughs are highly challenging.

Market Sentiment and Controversies Overlay

Beyond on-chain data and technicals, market sentiment also exerts pressure on ASTER. Controversies surrounding ASTER include questions about wash trading, exaggerated claims of wealth through dollar-cost averaging, and more. These negative voices, although not officially confirmed, have planted seeds of doubt in investors’ minds, weakening market confidence.

Key Focus for Follow-up

The core issue ASTER faces now is not just technical or mechanism-related, but confidence among market participants. From now on, and in the near future, key points to monitor include:

• Will the risk of long liquidation trigger: with a liquidation price of $0.621, very close to the current price
• Will shorts continue to increase or decrease their positions: determining the strength of selling pressure
• The actual effectiveness of the buyback mechanism: can it truly reduce circulating supply
• Whether technical support levels can hold: will $0.55 be effectively tested
• Whether the project team has new positive measures: strong signals needed to restore confidence

Summary

ASTER’s decline from $0.62 appears simple on the surface, but behind it are multiple pressures stacking up. Although the buyback mechanism has been launched, it seems powerless at a time when market confidence is at a freezing point. On-chain data shows imbalance between longs and shorts, technical downward pressure persists, and negative market sentiment is prevalent. These factors together form the current predicament.

In the short term, ASTER needs to break through not only technical resistance levels but more importantly, reverse market psychological expectations. This requires time to verify and joint efforts from the project team and the market. Investors should remain cautious, closely watch liquidation risks and technical support levels.