- BONK has dropped by around 21% in the last seven days amid a bearish trend across the memecoin market.
- The lack of speculative activity amid selling activity could trigger further declines.
Memecoins have been under bearish pressure, as their total market capitalization has declined by 15% to $97 billion in the last seven days. Bonk [BONK], currently the fourth-largest memecoin, has succumbed to these bearish trends after a 21% drop in one week.
The memecoin’s downward momentum could continue due to the lack of interest from buyers in the spot market and fewer derivative traders betting on its future performance.
BONK’s price analysis
BONK’s daily chart shows the memecoin trading within a descending parallel channel. This indicates a prolonged downtrend due to higher selling activity than buying activity.
At press time, the memecoin was testing support at the channel’s midline. If it drops below this, it could fuel bearish momentum. BONK needs to rally past the upper trendline with high buying volumes for a bullish reversal.
Source: TradingView
The Chaikin Money Flow (CMF) indicator is in the negative region indicating there is selling pressure, and BONK is likely in a distribution phase. The Money Flow Index (MFI) shows a similar outlook amid a drop to 47, indicating that bears have the upper hand.
Reduced speculative bets could fuel the downtrend
A surge in trading activity in the derivative market often shows high conviction among traders about future price movements. However, in the case of BONK, traders appear to be closing their positions.
The memecoin’s Open Interest has dropped by 28% in one week to $14.12M, according to Coinglass. At the same time, 24-hour derivative trading volumes stood at $36M, the lowest since the start of the year.
This decline could lead to stable prices due to reduced volatility, but the reduced interest might cause negative sentiment and weak price movements.
Key levels to watch
In the last four days, over $1M worth of BONK long positions have been wiped out, increasing sell-side pressure. Despite these liquidations, several clusters below the current price could drive prices lower.
Read Bonk’s [BONK] Price Prediction 2024-25
The closest liquidation cluster is at $0.0000273, followed by others at $0.0000270 and $0.0000267. If BONK drops to these zones, the resulting liquidations will fuel the downtrend.
Source: Coinglass
Conversely, the lack of liquidation clusters above the current price could hinder the uptrend and result in consolidation at the current zones.
Credit: Source link
