SUI Price Forecast: Chances of recovery grow after holding above $3.50

• SUI trades broadly steady above key support at $3.50 after the drop driven by the Cetus hack late last week.
• The Sui network TVL recovers slightly after dropping sharply on Friday after news of the hack.
• The derivatives outlook signals that recovery chances are increasing as short liquidations surge.

Sui (SUI) trades at $3.61 with a mild gain of 0.69% at press time on Monday, holding steady after the $223 million hack of Cetus, a Sui ecosystem Decentralized Exchange (DEX), in tandem with the broader market’s positive start this week, alongside the recovering Sui network metrics and derivatives market data signal recovery chances. 

Sui bulls hold dominance above $3.50 

Sui's price dropped nearly 8% on Friday, creating a bearish engulfing candle and testing the $3.50 support level. The altcoin held the $3.50 ground steadily with a long-tailed Doji candle on Sunday, reflecting underlying bullish confidence at lower prices. 

The rising 50-day Exponential Moving Average (EMA) nears the $3.50 level, providing an additional dynamic support after the recent golden crossover with the 200-day EMA on May 5. 

As SUI holds above $3.50, the long-tailed Doji signals a potential reversal ahead. Based on the price action, the immediate resistance is at $4.07, a crucial support now turned resistance. 

SUI/USDT daily price chart. Source: Tradingview

However, the slowdown in SUI near $3.50 catalyzes a drop in momentum indicators. The Relative Strength Index (RSI) at 50 moves flat after a decline from the overbought zone, reflecting a significant loss in momentum. Similarly, the Moving Average Convergence/Divergence (MACD) and its signal line decline towards the centre line as the bearish histograms surge. 

If the momentum continues to decline, a drop under $3.50 support could extend the downfall to the 200-day EMA at $3.01.

Sui network metrics gradually recover 

As SUI price action remains double-edged, the network recovery supports the bullish optimism. According to DeFiLlama, Sui's Total Value Locked (TVL) dropped by $590 million to $1.54 billion on Sunday from $2.13 billion on Friday. However, the short-term recovery drives the TVL to $1.68 billion.

Sui TVL Source: DeFiLlama

Additionally, the Sui network's stablecoin market capitalization is above the $1 billion mark, representing significant liquidity. The DEX's volume on the Sui network gradually improved to $271.9 million at press time on Monday from $178.85 million on Saturday. 

SUI derivatives anticipate a bullish bounce back 

Despite the recent negative sentiment buildup in the spot market, Sui derivatives remain upbeat. According to Coinglass, the Sui derivatives Open Interest (OI) stands at $1.77 billion, a 0.62% increase in 24 hours. This suggests a gradual increase in traders’ interest, with a spike in OI-weighted funding rate to 0.0124% representing the bullish intent of traders. 

SUI derivatives. Source: Coinglass

Additionally, the short liquidations rose to $1.04 million compared to the $604K in bullish positions in the last 24 hours. Hence, the overall derivatives data reflect a minor recovery in risk-on sentiment, anticipating a bullish reversal.