ATOM: Will bears flip the $8.98 support level?
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.
- 11.1% dip took ATOM to a critical $8.98 support level.
- A negative funding rate could limit a bullish rebound.
Bitcoin’s [BTC] price correction after hitting 2023 high of $31.4k afforded ATOM sellers the opportunity to extend the bearish downtrend. This was despite ATOM having been on a comeback trail with 43.2% gains between 10 June and 3 July.
Read Cosmos’ [ATOM] Price Prediction 2023-24
Sellers benefitted from the $10 psychological level serving as a barrier to the bullish advancement. As of press time, ATOM had reversed a decent portion of its recent gains. If sellers flip the $8.98 support level, ATOM could see further losses.
Defense of $8.98 support level vital for bulls
ATOM’s bullish rally from the $7.28 support level peaked at the $10 psychological level after making a series of higher lows. The selling pressure at the $10 price zone took the price down to the $8.98 support.
With the price hovering just above the key support, a successful defense of the level by bulls could spur another bullish rally. However, if the level caves to the selling pressure, bears could target the $8 and $7.28 levels.
A look at the on-chart indicators revealed a bearish leaning. The Relative Strength Index (RSI) remained under the neutral 50 mark and edged toward the oversold zone with a reading of 44. Also, the On Balance Volume (OBV) dipped on 3 July and has been on a steady decline, signaling the decreasing demand.
Taken together, the market structure and indicators pointed to bears gaining the upper hand in the mid to long term.
Dipping Open Interest favors shorts
According to Coinalyze, ATOM’s open interest rates dipped since 10 July. The OI declined by $6.2 million between 10 July and 12 July, denoting shrinking demand in the futures market. This could limit a bullish rebound for ATOM.
How much are 1,10,100 ATOMs worth today?
Similarly, the funding rate was largely negative with brief positive flashes. This hinted at decreasing buying pressure. Together, this portrayed a bearish outlook. However, shorts should closely monitor BTC’s price action as a bullish rebound could wreck sellers.