The Kusama price has been in a major sell-off this week. After soaring to a high of $518 early this month, KSM has crashed by more than 30% and is currently trading at the lowest level since November 1. This drop has brought its total market capitalization to about $3.2 billion, according to CoinGecko.
To be fair, Kusama is not the only cryptocurrency whose price has retreated. Far from it. Most cryptocurrencies have crashed this week. Bitcoin has fallen by almost $8,000 this month alone while the total market capitalization of cryptocurrencies has dropped to below $3 trillion.
But Kusama and Polkadot price crash is unique. For one, it is happening at a time when the two networks are carrying out the parachain auctions. This is a process where members of the Polkadot community vote for their favourite projects. They do so using DOT and KSM tokens.
And a closer look at these auctions shows that they are really successful. For one, Acala Network has raised more than $1.2 billion in the past few days.
So, why is Kusama price falling? The reason is that the ongoing auctions have already been priced in by the market. This explains why KSM and DOT prices surged to an all-time high recently. As such, this decline is mostly because of what is known as buying the rumour and selling the news.
On the four-hour chart, we see that the KSM price rallied to an all-time high in October. This rally is now being undone as investors sell the news. As a result, it has managed to move below the lower side of the ascending channel. It has also fallen below the first support of the standard pivot points.
Therefore, there is a likelihood that the coin will keep falling as bears target the second support at about $320. This view will be invalid if the coin rises above $400.
This post was last modified on %s = human-readable time difference 10:06