- The buying pressure, indicated by spot volume on the exchanges, pushed the price to $4.50.
- Signals from the RSI and Funding Rate suggested that CVX could fall below $4 as it was overbought.
Convex finance [CVX], the native token of the yield optimizer for various protocols, stunned the market with a 90.85% rally in the past 24 hours. On June 16, the CVX crypto was trading around $2.14.
But in the early hours of the 17th, the value reached $4.50. It later took a step back to 4.17, which was the price at the time of writing. For those unfamiliar, Convex started as a return optimizer on Curve Finance [CRV] before expanding to other protocols.
This time it looked like Curve was one of the reasons why CVX pumped. A few days ago, Michael Egorov, the founder of Curve Finance, put the project and the CRV holders at risk.
CVX volume surpasses previous milestone
This was due to Egorov being liquidated to the tune of $27 million on his credit positions. As a result of the event, CRV fell to an all-time low of $0.21.
However, the founder later announced that he had paid $10 million of the debt. The CRV collateral overhang opened the way for CVX’s incredible rise.
The evidence was also reflected in the inflow into veCRV, of which Convex Finance was part. This increase in inflows implied that many users were blocking their assets on Convex while expecting good returns.
Source:
Regarding the development, analyst Jason Hitchcock explained that Convex may not be possible. Hitchcock explained his thesis, noting that:
“Convex has conquered curve,frax, f(x)n, Prisma and more will follow. They get a large portion of all their fees and have significant incentive markets set up for them. Stablecoins and linked assets have found a home on Curve and those markets are rising as expected.”
Meanwhile, the CVX crypto price wasn’t the only notable increase. According to Santiment, the token’s volume has increased by a whopping 2677% in the last 24 hours.
At the time of writing, the total trading volume over 24 hours was $161.61 million. Additionally, AMBCrypto found evidence of increased interest in CVX crypto.
For example, CVX/USD spot volume on Binance reached nearly $32 million, marking a new single-day high for the token. However, traders in the derivatives market were not left out.
Source: Santiment
Like spot volume, derivatives fall into the same vein
According to data from Coinglass, Open Interest (OI) has increased by 759.50%. An increase in OI implies that new money is entering the market. However, when OI decreases, it means traders are closing their positions in the market.
At the time of writing, the CVX crypto OI was $6.28 million. If the value continues to rise, this could serve as a force for the price.
Should this happen, the CVX native token could attempt to reach $5 in the near term.
Source: Coinglass
However, it is important to evaluate other indicators. To assess CVX’s next direction, AMBCrypto analyzed its funding rate.
CVX Price Prediction: Is There a Drop Coming?
The financing rate measures whether market sentiment is bullish or bearish. The statistics also keep track of the compensation that longs and shorts pay.
If the funding is positive, it means that long positions pay an amount to short positions to keep their positions open. In this case, broader traders’ sentiment is bullish.
Conversely, negative financing implies that shorts are paying a fee, and sentiment is bullish. At the time of writing, the CVX crypto funding rate was positive, indicating that the perp price was at a discount to the spot price.
However, it seemed that the price started to drop. When this happens alongside positive financing, it means buyers of the perpetrator are in disbelief. It also implies that traders in the spot market start booking profits aggressively.
If this continues, CVX price could slide off the highs. Additionally, AMBCrypto examined the Relative Strength Index (RSI) on the 4-hour chart. The RSI measures momentum.
Source: Santiment
When the value is below 30, it means a cryptocurrency is oversold. On the other hand, a value above 70 indicates overbought positions. At the time of writing, the indicator was reading 87.96, indicating that CVX was overbought.
Is your portfolio green? Check out the Convex Financial Profit Calculator
Given the state of both indicators above, the token could struggle to continue its rise. It appears that if selling pressure increases, CVX’s value could drop to $3.70 in the coming days.
Furthermore, the forecast could be invalidated if market participants continue to place buy orders.