Sandbox [SAND] has increased by 75% in the past seven days amid growth across the entire cryptocurrency gaming sector.
At the time of reporting, SAND was trading at 0.602 USD after a 4% decrease in 24 hours. Meanwhile, trading volume has dropped by 51% according to CoinMarketCap.
The recent rise of SAND comes after an increase in volatility. This is evidenced by the expanded Bollinger bands on the altcoin's four-hour chart.
The strong upward momentum observed earlier this week caused SAND to break through the upper Bollinger band. However, at the time of reporting, the price has dropped to the middle band, indicating that buying pressure is easing.
The relative strength index (RSI) has a similar outlook after dropping from the overbought zone to 53. The RSI line also tends to stay below the signal line, a sign that selling activity is dominating price movements.
Source: Tradingview
Buyers seem to be defending the immediate support level of 0.58 USD. If this support level does not hold as selling continues, SAND could drop to the lower Bollinger band at 0.501 USD.
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Liquidations may drive more volatility
Data from Coinglass shows that in just four days, traders with short and leveraged buy positions on The Sandbox recorded over 44 million USD in liquidations. The forced closure of these positions, either by selling or buying, contributed to increased volatility.
Source: Coinglass
These liquidations also affect open interest, reaching 168 million USD at the time of reporting after a 6% decline in 24 hours. This indicates that traders are not opening new positions on SAND.
While declining activity in the derivatives market may lead to low volatility, it could also push SAND into a consolidation phase.
Active addresses decreased from the peak
The lack of new buying activity around SAND may be due to a significant drop in the number of active addresses. Data from CryptoQuant shows that in the past three days, the number of active addresses around the token has decreased from 3,809 to 1,821.
This decline may also indicate weakening market sentiment due to a lack of new gains. If this lack of demand continues, SAND may extend its downturn.
What is the next step for SAND?
The lack of buyers to absorb the selling pressure on SAND could lead to further declines for the token. After the RSI cuts below the signal line and forms a sell signal, the upward trend weakens, with a trend reversal occurring if buyers return to the market.
Traders should also pay attention to the price dropping below the lower Bollinger band as this could weaken market sentiment and push prices lower.
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