Axelar [AXL], a blockchain protocol similar to Chainlink [LINK] that enables cross-chain communication, experienced a significant surge of over 40% in October amidst a broader market recovery.
This notable rally propelled AXL to its highest level in several months, surpassing a previous Q2 support level below $1. This raises the question – What’s next for AXL?
Assessing AXL’s Current Uptrend
Starting from late September, AXL has been establishing higher highs and lower lows – indicating a bullish market trend favoring long positions as the price continued to climb.
However, currently, AXL is encountering resistance around the $0.88 level, which previously acted as a support level in Q2.
Given the overheated signals from technical indicators, a robust upward rally might be delayed, especially if Bitcoin struggles to breach the $70k threshold in the near term.
It’s possible that AXL could undergo a correction towards the 38.2% Fibonacci level before gathering enough momentum to breach the Q2 support level, potentially presenting a favorable re-entry point for investors.
Nevertheless, reclaiming the Q2 support level could enhance the likelihood of AXL reaching $1.29 on the price charts. Targeting $1.12 in the short term could yield an additional 20% in potential gains if achieved.
Notable Reduction in Whale Holdings
An important metric indicating challenges for AXL to overcome its current hurdles is the diminishing interest of large traders. Whales have been scaling back their long positions since mid-October, potentially contributing to the subsequent consolidation phase observed.
The decline in the Whale vs. Retail Delta further confirms this trend and suggests a need for a shift in sentiment to clear the previous Q2 support-turned-resistance level.
Moreover, a decrease in Open Interest (OI) rates serves as a temporary obstacle for AXL. In mid-October, the OI reached nearly $20 million but has now halved to $10 million. This indicates a 50% reduction in market participation with regards to the altcoin.
However, it’s worth acknowledging that this situation could change if Bitcoin reverses its recent downtrend and makes a substantial move above $70k.
Disclaimer: The views expressed in this article are not intended as financial, investment, or trading advice and remain solely the author’s perspective.