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Cosmos bulls finally confirmed a notable appearance following a 3-month pause. Their move appeared relief after investors witnessed bearishness that seemed to last forever. However, will ATOM retain the current outlook or another bear regime due to the cryptocurrency market’s downside state?
Shifting variables and market complexities offer an unclear macro perspective for Cosmos’ long- and mid-term view. Nevertheless, the near-term picture highlights a clearer outlook. For instance, ATOM bulls are displaying weakness signs following the recent rally. Let us analyze some aspects that suggest increased chances of a bearish retracement for the token.
Near-Term Profit Takers
While publishing this content, ATOM changed hands near $8.90, translating to a 57% surge from the $5.54 2022 lows seen in June. Investors that purchased the alternative coin near its bottom will likely start booking profits following the latest gains. That has already begun showcasing as surged selling momentum after ATOM price crossed past the 50-day MA.
The RSI’s (Relative Strength Index) 50% mark has historically served as a profit-booking level. Thus, friction or retracement will likely occur once the RSI hits this mark. The asset’s impressive surge has already propelled the alt beyond the 50% mark, and selling momentum began manifesting. Moreover, the MFI (Money Flow Index) backed the narrative as it highlighted brief outflows after climbing above 80.
On-chain metrics also support the near-term outlook. For instance, Cosmos’s whale supply index recorded some outflows within the past 48 hours. It had previously registered substantial inflows, suggesting that ATOM whales have been accumulating at dips. Meanwhile, the whale supply surged from 30-day lows of 43.92% on July 1 to July 5’s 44.46%. It then declined to 444.28% by July 7.
The whale supply decline within the past two days matched the Binance funding rate drop. That confirms a slump within the derivatives market, mirroring the spot market demand. Cosmos saw its trading volume peaking at 790M ATOM tokens on July 6 before substantial plummets emerged. That shows an uncertain return around the current ATOM price level.
Cosmos’ metric suggests a possible bearish retracement following the recent rally. Nevertheless, the token can still stretch its surges amidst improved market conditions. That could encourage more traders to avoid selling for near-term returns and hold their ATOM coins.
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