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Analyzing FLOKI’s Recovery Odds After Memecoin’s Price Drops to 3-Week-Low
FLOKI, the sixth-largest memecoin by market capitalization, has plunged to a three-week low of $0.000155 following a 5% drop in the past day. This downturn has raised questions about its recovery prospects and whether it will be able to reverse its current bearish momentum.
To assess FLOKI’s chances of rebounding, let’s take a closer look at recent market developments and on-chain metrics.
Firstly, it is essential to consider the technical indicators that can help us forecast the memecoin’s future performance. As depicted by the Money Flow Index (MFI) on the four-hour chart, FLOKI appears to be oversold after hitting 21. This could potentially precede a reversal if sellers are exhausted.
However, this positive signal is tempered by the bearish crossover of the 50-day Simple Moving Average (SMA) below the 150-day SMA. This development has led me to conclude that FLOKI has entered into a long-term downtrend.
In addition to these technical indicators, it’s also crucial to examine on-chain data for insights into whale behavior and the profitability of existing holders. According to IntoTheBlock, large transaction volumes have decreased by 14%, indicating that whales have been unwilling to buy the dip despite the recent price drop. On the other hand, there was a slight uptick in large holder positions.
Although this information may fuel selling pressure if traders decide to move their tokens to exchanges to minimize losses, it’s essential to acknowledge that some bullish signals are present, such as a slight growth in network activity.
Lastly, let’s delve into the derivatives market to understand sentiment and potential short-term opportunities. Coinglass reveals that the long/short ratio has surged due to an influx of short sellers betting on FLOKI’s continued decline. If this altcoin suddenly makes an unexpected move upwards, these shorts will be forced to close their positions, creating buying pressure that could aid its recovery.
In summary, while there are no guarantees in cryptocurrency markets, I believe the present circumstances offer a glimmer of hope for FLOKI’s short-term prospects.
Source: ambcrypto.com
