ThorChain’s token value dropped like a rock with the rest of the crypto space in May, but it looks like the selling may be exhausted at the moment. Will the bulls jump in or are the bears waiting for a new leg lower?
Is the Bottom Forming in RUNE?
To kick off the new week, we’re taking a look at ThorChain project, powered by the native utility token, RUNE. It’s a potential crypto asset to consider if you’re looking for exposure to the Decentralized Finance (DeFi) space, and what makes ThorChain pretty unique as a liquidity pool protocol is that it has an interoperable blockchain network. This allows users to swap native tokens between completely different Layer 1 blockchains, a feature not available on other DeFi protocols like UniSwap. For more information on ThorChain protocol, check out thorchain.org.
After reading up on RUNE and it looks like it’s an asset you may want to consider buying or selling, now is a good time to throw it on your watchlist as the market is creating potential setups for both the bulls and the bears.
On the daily chart above of RUNE against the Greenback, we can see the market is currently favoring the bears as the recent bounce from the May crypto crash lows failed to gain any traction from the bulls. After a brief retest of $15 on the bounce, the bears have already taken the market back to just above the May low, now trading around the $9.00.
If you’re a bear on the project (or on the crypto market in general), the scenario to watch out for is another down move and break below the $6.00 handle. This would likely pressure some bulls to unload their longs as well as draw in short-sellers to play the downtrend momentum. The next support area would likely be around the $3.50 handle, which would be a 40% drop from the $6.00 support area.
For those those bullish on the longer-term prospects of the ThorChain protocol, we’re currently seeing a potential buy setup as support seems to be forming around the $6 – $9 price area. We also see bullish divergence forming on the daily chart that could draw in longer-term technical bulls if the market can sustain a move back above the $10 handle.
Without any apparent direct catalysts to watch out for at the moment, the next move in RUNE is likely to be influenced by the broad crypto space. And if the broad crypto market can get back on its feet after that nasty May selloff, then the odds are pretty good that RUNE/USD will make its way back to the previous high is around $22 sometime this year. That means the potential return-on-risk profile is much more attractive to the bulls than the bears at this time.
What do you guys think? Is this the bottom for RUNE? Or will the sellers continue to win out and take the market to new lows?
Let me know in the comments below, and as always, remember to never risk more than 1% of a trading account on any single trade. Adjust position sizes accordingly. Create your own ideas and don’t simply follow what I do.