After a 4% drop in 24 hours, Sandbox continues to show a bearish trend.
The expansion of the Bollinger Bands and the increase in liquidations indicate that volatility is rising.
In the past seven days, as the cryptocurrency gaming industry has surged, The Sandbox [SAND] has risen by 75%. As of the time of writing, SAND is trading at $0.602, down 4% in 24 hours. Meanwhile, trading volume has decreased by 51%.
The recent surge in SAND is attributed to increased volatility. The expanding Bollinger Bands on the altcoin's four-hour chart are clear evidence of this.
Earlier this week, SAND's strong bullish momentum allowed the stock to break through the upper Bollinger Band. However, as of the time of writing, the stock price has retreated to the middle band, indicating that buying pressure is easing.
The Relative Strength Index (RSI) has also shown a similar trend, dropping from the overbought zone to 53. The RSI line is trending below the signal line, indicating that selling activity is driving the price movement.
The buyer seems to be defending the direct support level of $0.58. If this support level fails to hold due to continued selling activity, SAND may drop to the lower Bollinger Band ($0.501).
Liquidation may trigger more volatility.
Data from Coinglass shows that in just four days, traders holding leveraged short and long positions on The Sandbox recorded over $44 million in liquidations. These positions were forced to close (either by selling or buying), exacerbating volatility.
These liquidations have also impacted open contracts, which fell 6% within 24 hours, leaving open contracts at $168 million as of the time of writing. This indicates that traders are not opening new positions on SAND.
While a decrease in derivatives market activity may reduce volatility, it could also drive SAND to consolidate.
Active addresses have declined from their peak.
The lack of new buying activity in SAND can be attributed to a significant decrease in the number of active addresses. In the past three days, the number of active addresses for the token has fallen from 3,809 to 1,821.
This decline may also indicate weakening market sentiment due to a lack of new growth. If this insufficient demand situation continues, SAND may continue its sluggish performance.
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. The upward trend weakens after the RSI breaks below the signal line and forms a sell signal; if buyers re-enter the market, the trend will reverse.
Traders should also be wary of a break below the lower Bollinger Band, as this could weaken market sentiment and lead to a price decline.