KAIA rockets 70% in a month—but these red flags hint at a looming correction

KAIA’s parabolic rally just hit a wall of skepticism. The altcoin’s 70% monthly surge has traders buzzing, but lurking indicators suggest gravity’s about to kick in.

Technical divergence flashes warning

While retail FOMO fuels the pump, RSI and volume trends are painting a bearish divergence—classic signs of exhaustion after a hyper-charged run. Smart money’s already rotating, leaving bagholders to recite the crypto mantra: 'This time it’s different.'

Market cycles don’t care about your moon math

History shows altcoins rarely sustain these trajectories without cooling off. Whether it’s a 20% dip or full-blown retracement, KAIA’s chart is screaming for oxygen at these altitudes. Pro tip: When your Uber driver starts shilling it, the top’s probably in.

On-chain activity turns bullish

KAIA’s price surge comes amid a recent rise in transaction activity that has driven momentum in the past few days.

The Unique Address Count has reached a new monthly high after declining throughout the previous month.

Source: Kaiascan

At the time of writing, the Unique Address Count had risen to 735,997. This increase in new users appears positive, particularly after the previous slump—implying these addresses likely purchased KAIA from the market.

AMBCrypto investigated further and found more details about these addresses. Analysis revealed that many of them were likely liquidity providers in the decentralized finance (DeFi) market.

DeFi traders pump $3M+ into KAIA

Liquidity inflow into DeFi protocols has surged, with the Total Value Locked (TVL) rising by 7%. TVL measures the net liquidity FLOW into blockchain protocols over a given period.

Source: DeFiLlama

Until press time, the TVL ROSE by $3.15 million to reach $41 million, suggesting that investors have deposited more KAIA.

Simultaneously, trading activity across DEXes spiked as KAIA’s Trading Volume hit a monthly high of $1.86 million.

This momentum, building up over the past month, pushed total DEX Trading Volume up by 69%, reaching $16.35 million.

Source: DefiLlama

This continued growth in DeFi activity implies two key points: a portion of these active addresses appear to hold a long-term outlook for KAIA, and Kaia is seeing increased use for facilitating transactions.

However, while on-chain activity points to a potential rally for KAIA, off-chain trends tell a different story.

Can KAIA reclaim $0.20, or drop back to $0.17?

AMBCrypto analyzed crypto exchange activity—representing off-chain sentiment—to assess whether KAIA can retest its $0.20 level, last seen in January.

Using the Liquidation Heatmap, analysts found that despite strong on-chain support, KAIA may face a price drop. The Heatmap identifies liquidity clusters on the chart—price levels that often act as magnets during trading.

Source: CoinGlass

Currently, these clusters are concentrated below the current price, with some reaching as low as $0.17. If these price magnets are strong enough, a decline remains likely.

In the derivatives market, the Open Interest Weighted Funding Rate has dropped sharply, reaching -0.0345%.

Source: CoinGlass

This suggests that derivative traders expect a major price drop, as most open contracts are positioned to profit from a fall.

Given this prevailing bearish sentiment, KAIA’s chances of reclaiming its January level of $0.20 or higher remain slim.