As the world waits to see whether the crypto market will break out of its fortnight range, ATOM’s price action is already favoring the bears. It has achieved a significant downside so far this week and is currently headed for a retest of a key structural support level.
ATOM traded at $9.77 at press time, after tanking by 8.85% in the last 24 hours and roughly 8% in the last seven days. Its current price level seems to be trading within structural support territory near the $9 price level. This is an important support range because it held well during the last bearish drop in the second week of May.
The exact price level provided support during the last bear run in June and July. The price bounced back multiple times from the same support range. A similar retest happened a few hours before this press, but the real question is whether the same support level will result in a similar bounce-back.
Despite the bearish price action, ATOM’s RSI is still hovering above oversold territory. A dip below support would likely create a lower-low to higher-high setup between the price and RSI, hence a bullish sign. The MFI suggests that investors have been aggressively accumulating ATOM as the price drops.
What can we learn from ATOM’s on-chain metrics?
As far as on-chain metrics are concerned, both the Binance and FTX funding rates demonstrated signs of weakness in the last two days. This indicates lower interest from the derivatives market, a sign that investors became more cautious.
ATOM’s on-chain volume dropped significantly during the same period. Despite the above observations, the whale selling pressure died down in the last few days. The supply held by whales seems to have bottomed out during the weekend and even registered some uptick. This observation might point towards a higher probability that the $9 support level will ward off the bears.
Current data suggests a significant probability that ATOM’s structural support will hold strong. In that case, we might see a significant bounce-back near the $9 price range. However, the market is still prone to unprecedented changes in the news few days. This means that there is still significant risk that ATOM might break support and seek more downside, hence investors should tread cautiously.