Sei price has rallied 10% in the past 24 hours, topping out at $0.6595 on Thursday.
SEI could revisit the $0.5000 psychological level, a 25% drop to scale a good comeback opportunity.
A candlestick close above $0.8000 would invalidate the bearish thesis.
Sei (SEI) price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
Also Read: A bounce from here could signal a bullish trend for the SEI price
Sei price is up nearly 50% since it bottomed out at $0.4163 on April 14, steered by rising buying momentum as SEI bulls showed up, sending the altcoin past the resistance due to the descending trendline.
While the altcoin is coiling up for a continuation of the trend, selling pressure, which overpowers buyer momentum at current price levels, could compel a correction. Based on the volume nodes on the right, the large spikes in bearish profiles (grey)show that there is massive bearish activity at the current price of SEI token, relative to bullish activity (yellow).
This ratio favoring the bears, coupled with the position of the Relative Strength Index (RSI) below the mean level of 50, and accentuated by the Moving Average Convergence Divergence (MACD) that is in negative territory, suggests a growing short-term bearish sentiment.
If the bears have their way, the Sei price could drop, losing immediate support due to the descending trendline and effective fall below $0.5546 support. An extended fall could see the altcoin descend to tag the $0.5000 threshold, 10% below current levels. In a dire case, SEI could extrapolate the downtrend into the liquidity zone below $0.4683. This would constitute a 25% fall from current levels.
A sweep of this sell-side liquidity on the daily timeframe would provide inflection, balancing the market and propping it up for a recovery. Traders should watch for a lower high on the RSI, which would signify a reversal of the trend.
SEI/USDT 1-day chart
Based on Santiment’s data, the social dominance metrics have soared by 116% in four days, moving from 6.93 to 15.00 between April 19 and 25. This metric determines the percentage of mentions of the asset on crypto-related social media relative to a pool of 50 other assets.
The social volume metric has also risen by 50% in the same timeframe, moving from 0.054% to 0.081%. Growth in these metrics is bearish as it tends to inspire FOMO, which often precipitates a reversal. Growing social dominance is viewed as bearish by Santiment. FOMO traders can trigger reversals.
This metric measures the number of mentions of the asset on over a thousand crypto social media channels.
SEI Social dominance, Social volume
The weighted sentiment for SEI has also gone into the negative zone, meaning that bearish sentiment around the token was dominant in the market. The further the extreme (positive or negative) the crowd’s sentiment is in one direction, the more likely prices historically move the opposite direction.
This metric is calculated by mixing the overall social volume of an asset (mentions across social media), and the algorithmic measurement of each comment as to whether it is a bullish or bearish comment.
On the other hand, increased buying pressure could see SEI price sustain above the descending trendline. A strong move of the RSI above the midline of 50, confirmed by a decisive higher high on this momentum indicator, would confirm a prevailing uptrend.
While a move above the $0.7000 psychological level would be ideal, showing bullish activity having overcome bearish effort, the bearish thesis will only be invalidated once Sei price overcomes bearish activity indicated by the second series of spikes on the volume profile. Effectively, this would mean a candlestick close above $0.8000 in the one-day chart. Such a move would denote a climb of over 40% above current levels.
Token launches like Arbitrum’s ARB airdrop and Optimism OP influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.
A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.
Macroeconomic events like the US Federal Reserve’s decision on interest rates influence risk assets like Bitcoin, mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.
Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs. This has been observed in Bitcoin and Litecoin.
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