The cryptocurrency ecosystem is gradually seeing a comprehensive recovery, and while there is still a bit of volatility in the market, exchange tokens are on a bullish tear as investors return back to trading actions.
The market plunged by shedding more than $200 billion in a couple of days this past week as every digital currency experienced a ripple effect of the fall of the Terra blockchain network. The LUNA coin lost 99% of its value while the protocol’s native token, UST, is currently changing hands at $0.1765 instead of $1 according to CoinMarketCap’s data.
How Exchange Tokens are Performing
Led by Binance Coin (BNB), the cryptocurrency of the world’s largest trading platform is up 6.32% to $297.72, a significant trading level considering its plunge to almost a 12-month low of $216.32 earlier in the week. Despite the broad-based sell-offs the coin has recorded, it is still ranked as the fifth-largest digital asset with the USD Coin (USDC) displacing it from the fourth position.
FTT, the native coin of the FTX Derivatives Exchange is changing hands at $31.45, up 3.5% in the past 24 hours. KuCoin Token (KCS) is also seeing a remarkable run in its price, equally surviving the similar onslaught that was experienced by its peers.
The cryptocurrency is up 11.34% to $13.57, a figure that is 52.53% from its All-Time High (ATH) of $28.80.
The rejuvenation seen in these exchange tokens is evident that demand is picking up from traders as many took the ‘wait and see’ approach amidst the extreme volatility that engulfed the ecosystem a few days ago.
Exchange tokens serve a very vital role in the functioning of their respective platforms, and unlike other tokens with limited utility, their rates of growth can be projected to exceed other prominent tokens in the medium to long term.
KuCoin (KCS) prices ticked up in the early Wednesday session on July 7, in part because of an ongoing market rally across the top exchange-based utility tokens.
The 72nd-largest cryptocurrency peaked for the day at $14.847 before correcting lower on interim profit-taking sentiment. The move downside accompanied decent volumes, alerting that the sell-off momentum could continue across the European and the U.S. sessions.
At the time of writing, the KCS/USDT exchange rate was approximately $14, up more than 100% on a month-to-date timeframe (MTD).
Therefore, KuCoin’s bearish correction appeared as an attempt to neutralize its overextended upside momentum. The cryptocurrency’s relative strength index (RSI) on one-day charts popped above 70 following its latest price spikes, a reading that technical terms the underlying asset as “overbought.”
The RSI continues to float above 70, alerting about KuCoin interim downside risks before it attempts to break above the technical resistance around $15 (as shown in the chart above).
Conversely, the price breaking out of a descending channel range to the upside raised its prospects of extending the bullish move further higher. As the charts below illustrate, KCS trended lower while fluctuating inside a falling range—this pattern appears like a Falling Wedge
Falling Wedges are bullish reversal patterns. They come into the picture when an asset’s price action forms a conical shape while sloping down and forming at least two reaction highs and lows. Adjusting the KCS/USDT’s lower trendline move makes a similar descending structure.
Falling Wedge breakouts are technically skewed to the upside. Therefore, KuCoin’s latest resistance break, coupled with a spike in volumes, can be called a bullish breakout, with its profit target lurking near $19.751 (situated as far as the maximum Wedge height).
KCS’s upside move, on the whole, appeared as a part of an overall price rebound across the exchange token markets.
Nonetheless, KCS markets showed strikingly lesser volumes in the previous 24 hours compared to its exchange-token rivals. For instance, the second-to-worst volume logged by an exchange token was roughly $620,000 (see Unus Sed Leo in the chart above). On the other hand, KuCoin’s 24-hour adjusted volume was $63,531.
Thin volumes mean that there were fewer numbers of KCS tokens trading. In turn, there was a lower KCS liquidity across the markets. As a result, an asset’s price volatility rises in a low volume market and makes it susceptible to the wilder upside and downside moves.
The popular analogy serves as additional headwinds for KuCoin bulls as they attempt to claim the Falling Wedge’s profit target.
KuCoin Shares, or KCS, serves as a utility token on the KuCoin exchange. The platform uses KCS to reward users for using its services, similar to how Binance deploys BNB as a measure to offer users discounts on trading fees. Holders of KCS, meanwhile, also receive a daily dividend, i.e., a KuCoin bonus, which equals 50% of the trading fees on the exchange.
As KuCoin moves to become a fully decentralized platform, it plans to use KCS for transaction fees. The exchange also intends to buy back and destroy half of KCS’s 100 million supply cap. The funds to facilitate the buyback, again, comes from KuCoin’s trading fees.
VORTECS™ data from Cointelegraph Markets Pro also began to detect a bullish outlook for KuCoin Shares price hours ahead of the July 7 rally.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
As seen in the chart above, the VORTECS™ Score flashed green on July 6, 21:55 UTC, with a score of 65 with the price continuing to climb higher above $11.27. KuCoin-related tweet volume queries also surged by 1,246.31% over the past 24 hours.
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