BONK Price Under Pressure as Bears Eye a Potential 40% Drop
Popular meme coin BONK has been on a tear recently, with prices skyrocketing by nearly 50% over the past week. While this has put many holders in gains, the market has become overheated, with some indicators suggesting an imminent price correction.
If buyer exhaustion sets in, the meme coin may be due for a 40% price decline. This analysis delves into why.
BONK Market Heats UpAn assessment of BONK’s derivatives market has revealed a decline in the token’s futures open interest over the past few days. Since it climbed to a three-month high of $15 million on September 29, the meme coin’s futures open interest, which tracks the number of outstanding futures contracts, has dropped by 29%. As of this writing, this stands at $10 million.
Read more: How to Buy Solana Meme Coins: A Step-By-Step Guide
BONK Futures Open Interest. Source: Coinglass
Interestingly, BONK has maintained its uptrend, climbing by 13% during that period. The decline in the token’s open interest while its price rises suggests that fewer new participants are entering the market. This signals that its upward trend may be losing strength, and If fresh buyers do not back the rally, it may not be sustained for long.
Furthermore, BONK’s double-digit rally has been accompanied by a significant surge in market volatility, evidenced by its widening Bollinger Bands indicator. As of this writing, BONK is trading slightly above the upper band of this volatility marker.
Bonk Bollinger Bands. Source: TradingView
Generally, when this happens, it implies that the current market trend (an uptrend in BONK’s case) is likely to continue, at least in the short term. However, as the price moves too far outside this upper band, it signals that the asset has been overbought, which may lead to a pullback or correction in the near future.
BONK’s Relative Strength (RSI) confirms this outlook. At 74.33, this indicator, which measures an asset’s oversold or overbought market conditions, signals that the meme coin is overbought. An RSI reading of 73.75 hints at an imminent buyer exhaustion, often followed by a price drop.
Bonk Relative Strength Index. Source: TradingView
BONK Price Prediction: All Lies With the Bears
A surge in profit-taking activity as BONK’s price reaches new highs could lead to a pullback. Should this occur, the meme coin will likely attempt a retest of resistance at the $0.000022 level. If selling pressure intensifies at that point, BONK may continue its decline, seeking support around $0.000015.
Read more: 11 Top Solana Meme Coins to Watch in September 2024
Bonk Price Analysis. Source: TradingView
However, a successful retest of the resistance level could see BONK resume its uptrend, reinforcing bullish sentiment toward the altcoin. In this scenario, BONK’s price could rally toward $0.000033, potentially clearing the way to a four-month high of $0.000044.
The post BONK Price Under Pressure as Bears Eye a Potential 40% Drop appeared first on BeInCrypto.