Fetch.ai's (FET) new Earn and Burn mechanism is indeed a key factor that could drive the value of this token. This system works by reducing the circulating supply of FET while maintaining the demand for the token for purposes within the ecosystem. Below is a detailed analysis of the bullish potential:
1. Burning mechanism and its impact on supply
• According to the announcement, up to 100 million FET will be burned in December, equivalent to removing a large amount of tokens from the market.
• This reduces the overall supply, a factor that often leads to price increases if demand remains stable or increases.
2. Technical analysis
• Breaking the downtrend channel: This move signals a change in trend, shifting from bearish to bullish.
• Important resistance level $1.67: If surpassed, FET could aim for $2.56, a potential price based on technical analysis.
• RSI at 60.45: This index shows that FET has not yet entered the overbought zone, meaning there is still room for further increases.
3. On-chain data and market sentiment
• MVRV ratio -86.12%: This is a positive signal, indicating that FET may be undervalued.
• Open interest increased by 10.38%: This indicates strong interest from traders.
• Significant trading growth of 7.44%: Increases from institutions or whales are often bullish signals.
4. Risk factors to monitor
• Although the signals are leaning towards a bullish outlook, breaking through the $1.67 level is crucial. If it fails, FET may return to a lower support level.
• The volatility of the crypto market as a whole is also a risk factor, which can affect the trend of FET.
Conclusion
FET's new burning mechanism has great potential to stimulate price increases, especially when combined with positive technical signals and market sentiment. However, investors should closely monitor important resistance levels and consider risks before making decisions.
