Fetch.ai’s price has increased by 18% in three days, but still needs to watch out for a 27% rally to reach its ATH.
About 95% of all FETs in circulation are profit, and as we all know, this creates a top market.
The price of DAA Divergence is flashing a “sell signal” due to declining participation from FET holders.
The price of Fetch.ai (FET) is trading at $2.58 after breaking through the critical resistance level of $2.50, but this may not spark the rebound that investors expect.
The reason behind this is that FET is witnessing a potential sell-off as altcoins are noting the market top.
Fetch.ai may notice some pullbacks
Fetch.ai’s price is breaking out of consolidation and trading above a critical resistance level, which suggests that a rebound could be imminent. However, this time around, the opposite is true as the altcoin established a market top this week.
A market top is the highest point in a security's price before a sharp decline, indicating that bullish activity has peaked. Generally, as the market cools, a correction ensues, and investors sell off.
This can be confirmed if the total supply in profit eventually exceeds 95% of the circulating supply. This is the case with FET as 95.3% of the supply is in profit. Therefore, the price of Fetch.ai has formed a market top.
Fetch.ai supply profits. Source: Santiment
Therefore, profit taking is possible and depending on the behavior of investors, this pattern can be followed.
Further supporting this thesis is the price-daily active addresses (DAA) divergence. The price-DAA divergence analyzes the difference between an asset’s price movement and the number of active addresses transacting on its network. Typically, a sell signal is flashed when price increases but participation decreases.
Fetch.ai price DAA divergence. Source: Santiment
If this is followed, FET holders may soon start selling their holdings to secure the gains made to date.
FET Price Prediction: Possible Bearish Impact
Fetch.ai’s price broke through the $2.50 resistance and is trading at $2.58, up nearly 18% in three days. This has allowed the altcoin to escape a month-long consolidation, and FET may soon re-enter.
This is because the above-mentioned conditions indicate a bearish outcome for the asset. Therefore, the price of Fetch.ai could lose the $2.50 support and drop to $2.26 or lower.
Fetch.ai price analysis. Source: TradingView
On the other hand, a rebound from the $2.50 support level could result in sideways trading until the market cools off and demand remains high. Such a gradual rise could see prices continue to rise, invalidating the bearish thesis.
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