3 reasons why PONS crypto’s 40% rally to $1 could stall short term

PONS crypto bounced 11% on Tuesday but was still struggling below $0.8. The altcoin has been caught up in the broader lull and slow traction in the Robinhood memecoin scene. 

As the native token of the Pons app, the memecoin launchpad on Robinhood (think of it as Pump. fun for the new L2), its value is tied to revenue and ecosystem traction. 

After exploding over 2600% (27x) between late August and early September, PONS retraced 46% to a crucial golden zone above $0.5. 

Despite the slight drop in Robinhood memecoin mania, the price chart showed PONS building momentum to retarget $1. 

What’s stopping PONS crypto from hitting $1?

As mentioned earlier, the September pullback eased at the golden zone of 50% or 0.5 (right above $0.5). In most cases, the 50%- 61.8% Fibonacci retracement levels (also known as golden zones) have acted as support and stopped pullbacks. 

So, the area (above $0.5) could remain a key mid-term support for bulls to push forward. In fact, the 11% pump on Tuesday used the zone as a springboard. 

Besides, PONS has been making higher lows in the past few days, signalling building momentum to push higher. 

If the trend holds, clearing the immediate hurdles at $0.77 and $0.85 could allow bulls to target $1. That would translate to a 40% potential gain if the $1 target is hit. 

However, the ATR (Average True Range, red line) indicator on the price charts has been trending downwards for the past few days. It measures volatility and, by extension, whether there is a pending strong breakout. 

The flat and sluggish ATR momentum meant that PONS bulls should be cautious, as an immediate move towards $1 or above it could be elusive, at least in the short term. 

Is a long squeeze likely for PONS?

Interestingly, liquidation heatmaps also painted a cautiously optimistic outlook. Currently, most of the upside liquidity (short leveraged positions) was below $0.8. 

However, the major liquidity clusters (leveraged longs) were at $0.55, $0.60, and $0.65. This implied a long squeeze couldn’t be overruled. 

Besides, the decline in the Pons app’s daily revenue by 5x, from $11M to $2M, was another warning to bulls. The platform uses 80% of its revenue for PONS buybacks; hence, the slump could also delay a strong surge to $1. 

Overall, PONS crypto’s 11% surge and strengthening momentum on the price charts masked underlying weak fundamentals. If the Robinhood memecoin scene drags Pons app’s revenue lower, the altcoin price may struggle below $1.  

Final Summary

• PONS crypto was slowly building upward momentum with a 40% potential gain if $1 is hit 
• However, fundamentals have weakened, with a 5x daily revenue fall to $2M