The Tezos price pulled back in the overnight session as sentiment in the cryptocurrencies industry eased. The XTZ coin declined to $4.622, which was substantially below this week’s high of more than $5.4270. Still, the coin has risen by 60% this week, bringing its total market value to more than $4.1 billion. It is the 37 biggest coin in the world.
Tezos is a proof-of-stake blockchain project that initially started as a privacy-focused coin. Today, the ecosystem has grown to include the concept of smart contracts. Its proof-of-stake mechanism is different from others in that it has introduced the concept of a slasher, chain-of-activity, and proof-of-burn.
In the past few years, the number of projects built on Tezos have increased. Most of these projects are in the Decentralized Finance (DeFi), finance, gaming, and non-fungible tokens. Some of the top projects built on Tezos are Tezfin, SmartLink, Wrapped Tezos, and homebase. Tezos has also partnered and become a major sponsor of Red Bull Racing, one of the biggest Formula 1 team.
Still, Tezos faces significant challenges going forward. The biggest one is that it is competing with Ethereum, a platform that dominates the blockchain industry. It is also competing with other fast-growing platforms like Solana, Polkadot, and Binance Chain. On a positive side, data on Tezos deployment have been relatively strong as you can see here.
Early this week, I published an article in which I predicted that the XTZ price would soar to about $5. This prediction was correct as the price soared to more than $5.40.
A look at the daily chart shows that the recent Tezos rally happened after it formed an inverted head and shoulders pattern whose neckline was at the $3.82 level. Now, measuring the distance between the head and neckline shows that the next key level to watch will be at $5.80, which is slightly below the highest point this week.
At the same time, the Relative Strength Index (RSI) has been in an upward trend and is currently slightly below the overbought level of 70. The price is also above the 25-day and 50-day moving averages.
Therefore, while the overall bullish trend is likely, I can’t rule out a situation where profit-taking pushes it to the head and shoulders neckline at $3.8292. This is about 18% below the current level. Still, in the longer term, the bullish trend to the all-time high of $8.39 will continue.