dYdX price eyes 10% losses amid exit liquidity after 6.52 million DYDX token unlocks
- dYdX ecosystem will add 6.52 million tokens worth $13.95 million to its circulating supply in under 24 hours from now.
- Like the previous cliff unlocks event, DYDX could fall 10% to $1.882 as traders avoid being caught in exit liquidity.
- Invalidation of the bearish outlook will occur if the altcoin records a decisive daily candlestick close above $2.347.
dYdX price shows signs of an impending downtrend, and for good reason, considering the network will unleash millions of DYDX tokens to the markets in cliff unlocks. While part of the tokens will go to the community treasury, a huge chunk will go toward liquidity provider and trading rewards.
The possibility of investors offloading the reward allocations for immediate selling sets dYdX price up for imminent selling pressure.
Also Read: Optimism, Sui, Hedera prices brace for over $138 million worth in token unlocks
dYdX price readies for a 10% downswing
dYdX price could fall 10% after the network pours an additional 6.52 million DYDX tokens worth approximately $13.95 million into its circulating supply. In the previous unlocks on August 1, the network unlocked the same amount of tokens, which sent the price down the same gap to find support at $1.882.
DYDX token unlocks
With history repeating, bolstered by bearish fundamentals, dYdX price eyes the same fate that could trap traders among exit liquidity.
Increased seller momentum could send dYdX price below the immediate support level at $2.005 to potentially dip into the demand zone (blue) around the psychological $2.000. Strong buyer momentum often defines demand zones, meaning DYDX could bounce from this zone.
However, if selling momentum from bears outweighs aggressive buying from bulls in the blue order block, dYdX price could slip through to tag the August 1 lows at around $1.882. Such a move would constitute a 10% downswing.
In the dire case, dYdX price could extend a leg south to find support at around $1.779, levels last seen around July 10.
Already, momentum indicators suggest an impending slump, with the Relative Strength Index (RSI) headed south and the Awesome Oscillator showing histogram bars turning red, indicative of falling momentum.
DYDX/USDT 1/day chart
On the opposite side, invalidation of the bearish outlook would occur if dYdX price extends north, breaking past the supply zone (red order block) and making it a bullish breaker by decisively closing above it. A daily candlestick close above $2.347 would be ideal, constituting a 10% ascent from current levels.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
Author
Lockridge Okoth
FXStreet
Lockridge is a believer in the transformative power of crypto and the blockchain industry.
