Pyth network [PYTH] The market is flooded with heavy capital flows, and has impacted the value of many cryptocurrencies. Over the last month alone, $584 billion worth of value has been lost, and some assets have suffered more than others.
PYTH on the other hand, made a new all-time high and fell to around $0.04 before staging an 14% recovery. It was possible that the investors were reinvesting their capital in this asset.
Now, the move may look bullish on the surface, but one question lingers – Is this a sustainable recovery, or a temporary rally set to trap buyers at the top?
PYTH’s rally could be capped by a supply zone
PYTH is now facing a significant obstacle, as the recent leg of recovery has driven the price into a blockage in major orders.
The supply block marks the areas on a graph where there are high concentrations of buy orders. Moving into these zones often causes a drop in prices.
The sellers had yet to make a serious push for lowering the price. It seemed that the buyers were absorbing supply at the moment and maintaining the current level.
That resilience seemed to track with the fundamentals too as Pyth’s total value staked edged up to $44.22 million – An increase of roughly $8.92 million in the three days since 9 June.
The structure is only one part of what determines whether PYTH will climb. The momentum indicators should also be considered.
Momentum indicators reinforce PYTH’s upside
The first indicator behind this bullish case was the Average Directional Index (ADX) – A tool traders rely on to gauge whether a trend is strong. As of the date this was written, the ADX suggested that PYTH was positioned in a very bullish climate, which left the likelihood for a price increase intact.
Money Flow Index, which measures the capital inflows and outflows tied to a particular asset, indicated that more money was flowing into PYTH. The indicator had a reading of 57 – Firmly inside the bullish region above 50. It seemed that the capital had continued to flow into the market.
Volume also increased by 21%, to $41million. The simultaneous rise in volume and price is often a sign of growing strength for the bulls, increasing the chances that the upward trend will continue.
PYTH’s positive rate of funding signals new demand
The bullish sentiment in the perpetual futures markets of PYTH is what makes it more likely that the company will overcome the resistance.
Coinglass reports that at the time of publication, funding rates were slightly positive.
Positive funding rates, coupled with a surge in permanent capital, suggested that new money was entering the leveraged market, and traders were positioning themselves further up for the PYTH.
PYTH is well positioned to move up for the long term. It has a combination of rising capital, which will continue, behind an ongoing rally.
Final summary
- PYTH has recovered 14 percent from its record low. It’s a sign buyers are returning after the market suffered a massive selloff.
- The wall of orders to sell sat just above the time-of-press price. However, the rising demand as well as the consistent staking suggests that there is still room for recovery.
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Source: ambcrypto.com
