NEAR Protocol [NEAR], one of the standout altcoins in the crypto space, has captured investor attention once again with a significant surge in both price and activity. At press time, NEAR was trading at $4.47, having gained an impressive 12% in just a short period. But with rising transaction volumes and growing interest from traders, many are asking: is this just the beginning of a more sustained rally?

The answer may lie in the bullish sentiment observed across the market. With the Federal Reserve’s decision to cut interest rates, a wave of optimism has spread, lifting several cryptocurrencies. NEAR is no exception, and its recent price performance seems to reflect broader market momentum.

But while these gains are eye-catching, questions about the rally’s sustainability remain. Let’s take a deeper dive into the factors behind NEAR’s rise and whether this is a sign of further upward momentum.

NEAR’s Bullish Sentiment: Why Traders Are Going Long

A striking indicator of NEAR’s current market sentiment comes from Binance, where an astounding 63% of traders have opened long positions, indicating a clear bullish bias. This shift in positioning signals that investors expect the token’s price to continue climbing, driven by confidence in its underlying fundamentals.

Additionally, NEAR has seen a massive surge in trading volume, increasing by more than 90% according to Coin Market Cap. Such a parabolic rise in volume generally suggests a buying frenzy, but it also raises concerns about whether the rally is sustainable. Are these gains built on solid fundamentals, or is the price rise a speculative bubble that could burst?

A Closer Look at NEAR’s On-Chain Activity

On-chain data paints a more optimistic picture for NEAR’s long-term outlook. According to data from Near Blocks, the protocol has experienced a significant rise in daily transactions, reaching a two-week high of 7.33 million transactions. This is a notable increase from just a week ago when the transaction count stood at 6.7 million. The rising network engagement points to increasing demand for NEAR, as more users interact with the platform.

Moreover, new addresses joining the network have surged significantly. In early September, NEAR had around 687,000 new addresses, but by mid-month, this number had high to 900,000 daily new addresses. This influx of new users suggests growing interest and adoption, which could provide strong support for future price gains.

DApp Activity Fuels NEAR’s Growth

The rise in daily transactions isn’t just limited to trading activity. Data from Dapp Radar shows that decentralized applications (DApps) on NEAR have also contributed significantly to the increased transaction count. In fact, monthly DApp transactions on the protocol have jumped by 14%, exceeding $182 million. This surge reflects NEAR’s growing appeal within the decentralized finance (DeFi) and blockchain ecosystems.

However, it’s worth noting that while DApp transactions have increased, the overall volume of DApp transactions has dropped by 54%. This decline could be attributed to fluctuations in NEAR’s price, as market volatility tends to impact the value of transactions on the network. Nonetheless, the rise in activity remains a positive sign of the network’s ongoing growth.

Derivative Markets: NEAR Attracts Increased Interest

In the world of derivatives, NEAR has also seen significant gains. Open Interest (OI) for NEAR, which measures the total value of outstanding derivative contracts, has reached $184 million, marking an eight-week high. This level of OI hasn’t been seen since late July, indicating that more traders are placing bets on NEAR’s future price movements.

The rise in Open Interest suggests that traders are increasingly optimistic about NEAR’s potential for further gains. Coin glass data shows that OI has been gradually increasing since early August, signaling that investors are opening new positions with the expectation of profiting from price increases.

Additionally, NEAR’s funding rates have turned positive, reaching 0.0112%, the highest level since June. Positive funding rates indicate that traders are willing to pay a premium to hold long positions, further reinforcing the bullish outlook for NEAR.

What’s Driving NEAR’s Bullish Momentum?

Several factors are contributing to the growing bullish sentiment around NEAR. One key driver is the explosive growth in the market for Big Data and AI cryptocurrencies, a sector where NEAR plays a leading role. In the past month alone, the total market capitalization of AI and Big Data coins has surged from $22 billion to $32 billion, according to Coin Market Cap.

As the largest AI-focused cryptocurrency, NEAR dominates over 15% of this market. Its strong position in a rapidly growing sector has undoubtedly fueled optimism among investors. With the rise of AI and Big Data applications, NEAR is well-positioned to benefit from this emerging trend, which could provide further upward momentum for the token.

Can NEAR Sustain Its Recent Gains?

Despite the recent price surge and bullish on-chain signals, there are still risks to consider. The dramatic rise in trading volumes, while encouraging, could also point to potential volatility. If NEAR’s price growth is primarily driven by speculative trading, the rally may not be sustainable in the long run.

Furthermore, the decline in DApp transaction volumes suggests that while NEAR is seeing increased activity, it may not necessarily translate into higher network value. Investors will need to watch closely to see if NEAR can maintain its current momentum or if it faces a pullback in the coming weeks.

Conclusion: Is NEAR’s Price Rise Just the Beginning?

NEAR Protocol’s recent 12% price gain and the surge in network activity have certainly piqued investor interest. With growing transaction counts, increasing Open Interest in the derivatives market, and a bullish sentiment among traders, there’s a strong case to be made that NEAR could continue its upward trajectory.

However, the question remains whether this is just the beginning of a larger rally or a temporary bump in a highly volatile market. For long-term investors, the growing engagement on the NEAR network and its leadership in the AI crypto space provide reasons for optimism. But as always, caution is advised, and investors should keep a close eye on key metrics to gauge whether NEAR can sustain its recent gains.