Memecoins emerged as the top underperformers over the previous week, with large and mid-cap alternative coins taking the spotlight amidst renewed calls for an altcoin season. Bonk [BONK] led the pack of biggest losers as profit-taking intensified following its achievement of a new peak at $0.000062.
At the time of this report, BONK had fallen by 29% from its recent all-time high. While this may indicate a broader trend of capital shifting, bulls are urged to keep an eye on specific levels of interest.
Assessing the Pullback of BONK
Despite falling slightly short of the extended golden Fibonacci ratio (approximately -61.8%), the new all-time high can still be considered as the next optimistic target in the event of a recovery following the pullback.
During the uptrend, notable price gaps were identified at two distinct white zones (referred to as Fair Value Gaps – FVG). The initial price gap was situated above the 23.60% Fibonacci level, while the second gap coincided with the 50% Fib level.
The latter coincided with the 50-day Simple Moving Average (SMA), indicating potential robust support in case the pullback dips below $0.000039. If the bullish momentum persists, these levels could potentially serve as significant re-entry points for bulls.
With the Stochastic RSI signaling overbought conditions, it suggests that BONK might still experience further pullbacks if short sellers continue to capitalize on profit-taking opportunities.
Decline in Demand
During the initial half of November, the rally was primarily fueled by rising demand in the spot market, as evidenced by an increase in the spot Cumulative Volume Delta (CVD), which was subsequently mirrored in the Futures market through a surge in Open Interest (OI).
Nevertheless, both the Futures and spot markets witnessed a decline in demand reflected by the downward movements in OI and spot CVD, respectively.
This decrease could potentially impede a strong recovery unless the meme coin narrative manages to regain dominance in the market.
Another negative indicator was the reduction in risk exposure by whales. Whales trading on the Binance platform have been steadily reducing their long positions since mid-November, as indicated by the negative readings observed on the Whale vs. Retail Delta metric.
Historically, a reduction in the participation of major players has often led to subdued price action or consolidation, a scenario that could impact BONK in the short run.
To anticipate a possible reversal in price, traders are recommended to monitor critical levels and be attentive to potential re-entries by whales, which could hint at a potential recovery for BONK.