Artificial Superintelligence Alliance [FET] has been feeling the pressure of a bearish market, experiencing a 14% drop in value over the past couple of weeks. This downward trend has prevented any significant breakthrough from its descending parallel channel.
Currently, FET is trading at $1.18. The cryptocurrency is continuously encountering resistance around the $1.34 mark, which coincides with the upper boundary of the descending channel. At the same time, buying interest seems to be on the decline.
With the Relative Strength Index (RSI) standing at 37, it’s evident that there is considerable selling pressure in the market. Additionally, the RSI has been forming lower lows, indicating a strengthening bearish sentiment.
The Average Directional Index is also on the rise, signaling a robust downward trend that could persist unless there is a significant shift in demand dynamics.
Despite the prevalent bearish conditions evident on the daily chart, on-chain metrics are hinting at the possibility of a bullish reversal.
FET Reserves on Exchanges Decline
Recent data from CryptoQuant reveals a notable decrease in FET holdings on exchanges over the past four days. The reserves have fallen from 502 million to a weekly low of 497 million.
A drop in exchange reserves typically has a positive impact on price by reducing the selling pressure. If this downward trend in reserves continues, it could lead to a decrease in selling activity surrounding FET, potentially setting the stage for a price recovery.
Moreover, a decrease in this metric implies that the recent downtrend may have shaken out weak holders who were contributing to the spike in selling pressure.
Increased Whale Activity
There has been a noticeable surge in whale activity involving FET transactions. According to data from IntoTheBlock, large FET transactions exceeding $100,000 have risen from 4.63M to 7.56M within a 24-hour period.
Such a spike indicates a heightened level of whale involvement in this altcoin. If these whales are accumulating FET, it could have a positive impact on price, but if they are offloading their holdings, it might intensify the ongoing downtrend.
Given that whales hold a significant portion of the token’s supply at 63%, their increased activity could lead to more volatile price swings.
Long Positions Remain Dominant
An examination of funding rates suggests that traders are still favoring long positions over short ones for FET.
Although long traders are paying a premium to maintain their positions, the 5% drop in open interest indicates a lack of demand for new long positions. This discrepancy between positive funding rates and declining open interest indicates a weakening bullish sentiment in the derivatives market. Without fresh buying interest and demand for long positions, the bearish trend may persist.