For many, SushiSwap is one of the most exciting projects in the DeFi space, with features like swaps, profit farming, lending, borrowing, and leverage all on one platform. With smart price action since early 2021, SUSHI has been delivering phenomenal returns – up nearly 1000% in just 2.5 months.
However, it hasn’t worked that well since then. In fact, this altcoin has not even entered the bull phase in November 2021. According to some, SUSHI is currently in a very worrying situation.
Technically, SUSHI is trading at the bottom of a descending triangle. Any deviation from this point could be bearish as there is no significant support until around $0.50.
In other words, there is no support to prevent the market cap from falling another 80%. Even the RSI is following the price closely and it is currently hovering around the 42 area. It might fall further before breaking the oversold zone.
SUSHI/USDT | Source: TradingView
Also, on-chain ads are giving warning signs everywhere. For example, the percentage of supply held by the top 1% of addresses shows an inverse relationship with price. Typically, the more major players hold a particular coin, the more likely that coin will rise in price.
Percentage of supply held by top 1% of addresses | Source: Glassnode
However, the case of SUSHI appears to be the opposite. Bigger players only join for the sake of winning and have little confidence in the long run. Whenever there has been a bull run historically, it has typically been accompanied by a decline in the supply share of these larger market participants.
This is a typical sell up, buy dip trading strategy.
Change in net position on the stock exchange | Source: Glassnode
All price rallies immediately lead to a significant increase in the net position change indicator on the exchange – indicating tokens are being moved from the wallet to the exchange for sale and vice versa.
In addition, the supply of the top exchange addresses is significantly larger than the supply of the top non-exchange addresses in the chain – which proves the above argument once again.
Offer of top exchange addresses compared to non-exchanges | Source: Santiment
Also, despite the price drop, the ratio of NVT to SUSHI is quite high. So, using this ratio, you can see how overvalued the network is. This ratio is calculated by dividing market cap by on-chain transfer volume – and NVT increases as market cap decreases, showing how bad on-chain transfer volume is.
NVT Rate | Source: Santiment
So, overall, unlike most of the other prominent coins, which have fallen in value due to market sentiment while fundamentals have remained intact, it looks like SUSHI is slowly deteriorating and could fall further due to weak fundamentals. Going short on this altcoin could be a viable strategy, however, caution should be exercised and the possibility of short-term volatility not ruled out.
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