3 Reasons Why Fantom (FTM) Risks Bearish Reversal By March 2023
Fantom (FTM) surged 230% Jan 1-Feb 3, partially paring its gains since. As a result of the massive rally, FTM stood at $0.57 on Feb 8, 12% lower than the Feb 3 peak. Meanwhile, the digital asset flashed several bearish signs that potential FTM investors should note. The post 3 Reasons Why Fantom (FTM) Risks Bearish Reversal By March 2023 appeared first on CoinChapter.
YEREVAN (CoinChapter.com) – Fantom (FTM) price surged 230% between Jan 1 and Feb 3 but has pared a portion of those gains since, trading for nearly $0.57 on Feb 8.
The token risks undergoing a fatal correction in the coming weeks for many reasons, as discussed below.
Fantom’s dependency on Bitcoin won’t do FTM favors
The Fantom price rally stood out across the crypto sector. However, it is noteworthy that the FTM/USD price action is still correlated with Bitcoin but with a higher fluctuation amplitude. Thus, if the benchmark crypto declines or if its recovery stalls, Fantom will likely follow suit.
Given the mixed messages from the Federal Reserve and the growing concern about another stock market downturn, Bitcoin is unlikely to have impressive gains in Q1, and so is Fantom.
Notably, the FTM coin still traded 83% below its all-time high, despite the impressive surge year-to-date. The chart below also demonstrates a cool-off in FTM buying pressure, which signifies that investors chose to take profits, having low expectations for the surge to continue.
As the chart above illustrates, the Fantom coin has a line of potential resistances on the way in case FTM bulls double down again. The closest resistance stands at the previous peak of $0.65, with consecutive benchmark lines at $0.75 and $0.86. However, as mentioned, a strong leg-up does not appear likely.
Also read: Fantom (FTM) up 180% YTD – bullish on-chain metrics say more to come.
Conversely, in the case of a bearish scenario, possible supports for FTM would stand at $0.49, $0.41, and $0.35 lines.
#2 Alarming Fantom On-Chain Metrics
According to a report from crypto analytical platform Messari, Fantom metrics have not favored the bulls lately. “The return of popular developer Andre Cronje to the ecosystem at the end of 2022 breathed new life into the community,” noted the report, highlighting Cronje’s plans to revive the Fantom-based stablecoin fUSD.
However, since peaking upon Cronje’s return, the number of transactions dropped from approximately 3 million in January to about 2 million in February. Notably, in the same period, the ratio of successful transactions vs. failed ones visibly improved.
Moreover, while the number of daily active addresses peaked in Q4, compared to Q3 2022, it also declined since November’s “Andre peak.” Finally, it is also important to note that the said declines took place amid a price surge, underscoring that the rally might not be long-lived.
Also read: Stocks, Bitcoin Rally Could Stall After Powell Remarks — Here’s Why?
#3 Loss of DeFi Market Share
Messari also asserted that the platform’s total value locked (TVL) and low smart contract activity show a “stagnant ecosystem.”
According to data from the DeFi tracking platform DeFiLlama, the Fantom Network commanded 2.51% market dominance in Jan 2022.
However, the L1 lost over 1.5% of it throughout the year and came down to 1.08% in Feb 2023. Notably, while the price surge year-to-date was impressive, an uptrend in market dominance did not follow, as seen in the chart below.
The post 3 Reasons Why Fantom (FTM) Risks Bearish Reversal By March 2023 appeared first on CoinChapter.
