Injective price weakness persists despite over 5.9 million INJ tokens burned

Injective (INJ) price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price. Coupled with broader market gloom, INJ token’s doomed days may not be over yet.

Also Read: Injective could extend gains with 99% approval on upgrade proposal to reduce inflation

Injective price fails to recover despite deflationary interventions

Injective price continues to show weakness despite a recent 10,000 INJ token burn, which has brought the cumulative burning to over 5.9 million tokens.  

Token burning is a deflationary intervention where a certain amount of cryptocurrency tokens are permanently removed from circulation. This can have various implications and benefits for a project and its token holders.

For starters, reducing the total supply of tokens through burning effectively causes scarcity of the remaining tokens to increase. This can potentially lead to an increase in demand for the token, driving up its value.

Nevertheless, the impact of token burning on the Injective price appears to be delayed as bulls wait to buy INJ above the $33.08 price range.

Injective price may have further downside incoming, unless the bulls can haul it by around 30% to an area where bullish activity abounds. This is shown by the yellow shade on the volume indicator, around the mid-section of the Fibonacci Golden Zone, between 61.8% and 50% Fibonacci levels.

The Fibonacci Golden Zone is a key area in price charts that signals potential stabilization or reversal points after significant market movements, with the 61.8% and 50% levels forming the crucial Golden Zone.

Injective Price Outlook: Bulls to buy INJ above $33.08

With the Relative Strength Index (RSI) still below the 50 mean level, subdued and recording lower highs, Injective price could extend the fall. The Moving Average Convergence Divergence (MACD) reinforces this as the momentum indicator remains in negative territory. A bearish cycle may be in the works unless bullish effort increases.

A further downside would otherwise seem likely for Injective price even as INJ bulls try to defend the current position, seen with the small spikes on the volume profile adjacent to the price.

INJ/USDT 1-day chart

Conversely, if bullish momentum grows and Injective price forays into the Golden Zone above the 61.8% Fibonacci retracement level of $31.18, it would entice more buy orders. A candlestick close above the 50% Fibonacci Golden level of $35.23 on the daily chart would invalidate the bearish thesis.

To get here, however, the bulls must overcome resistance due to the 21 and 50-day Smooth Moving Averages (SMMA) at $31.80 and $33.08 levels respectively. 

The volume profile shows huge spikes around the area, showing that there is expected surge in bullish trading activity (yellow) once the price reaches this level. This heightened volume often suggests increased buyer interest and demand for the asset, which can push prices higher. Typically, a spike in volume accompanying a price increase is seen as confirmation of the bullish trend.

If buyer momentum overpowers selling pressure, the Injective price could extend the gains beyond the 38.2% Fibonacci retracement level of $39.28, presenting a breakout opportunity for INJ to reclaim the $53.00 range high.