Quant-QNT
Following its listing on the Binance cryptocurrency exchange, the WAXP price exploded higher, culminating in a 170% rally yesterday. But this may prove to be a short-lived party for the bulls. WAXP is already 30% off the highs, and if it drops another 5%, the selling could escalate dramatically.
Delegated Proof-of-stake protocol Wax (WAXP) leapt from $0.1100 to $0.4999 in three turbo-charged trading days. This followed the news the Wax coin was being listed on top crypto exchange Binance. Wax which operates a blockchain for collectables, video games and Non-Fungible Tokens, is riding the resurgent NFT market to the extremes. WAXP saw a huge surge in trading volumes following the listing as a wave of new buyers jumped on this year’s hottest investment craze. As a result, Wax’s market cap exploded from $314 Million to almost $800m in a matter of hours. But this morning the WAXP price is softer, and its market cap has retreated to around $620m. However, this has lifted the coin from obscurity to the 119th-largest cryptocurrency. And although this is an impressive feat, I should remind the bulls that parabolic rallies rarely last. Furthermore, when they reverse, they often do so in a ferocious fashion.
The scale of the recent move is clear on the daily chart. The rally left all visible resistance levels in its wake, clearing the 50, 100 and 200-day moving averages and surpassing March’s multi-year high of $0.3400. At first touch, $0.3400 proved a sticking point, and the WAXP price spent time wrestling with the resistance before bursting higher. Therefore I consider this to be an important area of support. And just as the buying accelerated above $0.3400, the opposite will likely happen if Wax trades below it. Furthermore, despite dropping 30% from yesterday’s high, the Relative Strength Index (RSI) reading of 78.70 is still extremely high. And on that basis, buying WAXT is fraught with peril.
This is not to say the price won’t go higher. It merely points out the signs that it may come down first. Of course, crypto sometimes operates outside the laws of logic and technical analysis. However, the law of gravity is universal.
For more market insights, follow Elliott on Twitter.