Bonk’s price has increased by 27% in the past 24 hours and is close to breaking through a key resistance level.
The RSI shows that the memecoin is on the verge of being overbought and will move into this zone on further gains.
BONK holders are betting that the memecoin’s price will rise further as funding rates hit multi-week highs.
Bonk’s price has been successful this week by taking advantage of the bullish sentiment in the broader market, inching closer to all-time highs.
While investors are fueling the rally, they may face some resistance if prices continue to rise.
Bonk investors bet on gains
Bonk’s price is seeing the impact of market growth and BONK holders’ bullish sentiment. The latter is evident in the memecoin’s funding rate, which has hit a two-and-a-half-month high.
Funding rates are regular payments made between futures market traders to keep the price of a futures contract close to the price of the underlying asset. Generally speaking, a positive funding rate indicates that the futures market is observing a dominance of long contracts. On the other hand, a negative rate indicates that short contracts are the choice of traders.
Currently, high funding rates are evidence that BONK holders are betting on price increases. To what extent this will be reflected in the asset is another matter.
BONK funding rate. Source: Coinglass
That’s because the relative strength index (RSI) is on the cusp of entering overbought territory. The RSI is a technical analysis tool that evaluates the magnitude of recent price changes to assess overbought or oversold conditions in the market.
RSI values range from 0 to 100, with readings above 70 indicating overbought conditions and below 30 indicating oversold conditions.
There has only been one time in the past when the RSI entered the overbought zone. This was in March, when the price of Bonk hit an all-time high of $0.00004800 but closed at $0.00003769.
BONK RSI. Source: TradingView
A correction then ensued as the market cooled off after the rally.
BONK Price Prediction: A little more up
The price of Bonk has broken the $0.00002840 resistance level and is close to breaking out of $0.00003392. This barrier has been difficult to break through in the past, but a breakout of it could propel BONK to $0.00003769.
The last time Bonk closed, it noted an intraday high of $0.00004800. A move up to this point is possible based on the factors mentioned above, but this is only the extent of the rally.
Since the RSI is already almost overbought, the rise will be halted before BONK can rise further.
Bonk price analysis. Source: TradingView
However, if a breakout above $0.00003392 fails, Bonk’s price could fall back to $0.00002840. Losing this support could erase half of the recent gains, dropping the memecoin to $0.0000 2,500 and invalidating the bullish thesis.
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