- Pyth Network sends multiple sell signals, triggering double-digit losses.
- Headwinds could accelerate declines amid a colossal $298 million token unlock, approximately 59% of the market capitalization.
- Open interest increased by 9%, while trading volume soared 75% to $82 million, signaling growing interest as PYTH slides.
The sharp decline in Pyth Network (PYTH) price to $0.135, with a decrease of over 13% on Monday, reflects volatile swings in the broader cryptocurrency market. The first-party oracle token, known for providing real-time market data to decentralized financial applications (dApps), exhibits a weakened technical structure amid mixed sentiment ahead of a gigantic token unlock event expected on Tuesday.
Pyth Network Faces Potential Supply Shock
Like many altcoins, Pyth Network’s tokenomics foresee staggered token unlocks, with the upcoming event likely to trigger immense volatility. According to data from CryptoRank, Tuesday’s unlock will release approximately 2.13 billion PYTH tokens, representing 58.7% of the current market capitalization of approximately $508 million. This equates to roughly $298 million.
Currently, 3.62 billion PYTH, approximately 36.2% of the total supply of 10 billion, are in circulation. The token unlock event will increase the circulating supply to 6.38 billion PYTH, representing 63.8% of the total supply.
The release of billions of tokens, more than half the market capitalization, could result in a significant supply shock. If beneficiaries of the unlocked tokens sell into the open market, selling pressure could mount, leading to extended losses, given that PYTH has already fallen over 11% on the day.
However, interest in PYTH is on the rise, with open interest (OI) increasing by 9.11% to approximately $46 million. Data from CoinGlass shows a subsequent surge in trading volume of 75% to approximately $82 million in the last 24 hours.
The rise in OI coupled with growing volume indicates that traders’ interest in the token is growing, with new positions being opened. It also signals increased liquidity, making it easier for traders to enter or exit positions. If the price of PYTH extends the fall, the increase in OI as volume grows would imply strong bearish momentum.
Pyth Network Bears Take Control Amid Price Drop
Pyth Network price extends losses below the 50-day Exponential Moving Average (EMA), currently at $0.158, following rejection of its recent uptrend around the 100-day EMA at approximately $0.18.
A sell signal from the SuperTrend indicator encourages traders to sell PYTH, anticipating a larger pullback toward the April 7 support at $0.107. This trend-following indicator uses the Average True Range (ATR) to measure volatility. A sell signal occurs when the price falls below the SuperTrend indicator line, changing from red to green.
Traders can use this tool as a dynamic support or resistance, suggesting that PYTH is in a strong downtrend.
After confirming a sell signal on the daily chart, the Moving Average Convergence/Divergence (MACD) indicator reinforces the bearish structure. Such a signal manifests with the MACD line (blue) crossing below the signal line. Expanding red histograms below the centerline consolidate the bears’ influence over PYTH.
Pyth/USDT Daily Chart
The Relative Strength Index (RSI) indicator at 40 indicates a strong downtrend, reflecting PYTH’s pullback from its peak of $0.211. This suggests the possibility of further declines toward lower support levels, such as the demand zone of $0.107 tested on April 7.
However, if the RSI falls below 30 into oversold territory, it could signal an imminent trend reversal, as such conditions often precede sharp recoveries and significant gains in price.
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