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- An 11.1% dip took ATOM to a critical $8.98 support level.
- A negative funding rate could limit a bullish recovery.
From Bitcoin [BTC] price correction after reaching the 2023 high of $31.4k provided ATOM sellers with an opportunity to extend the bearish downtrend. This is despite ATOM being on a comeback path between June 10 and July 3 with 43.2% gains.
Read Cosmos’ [ATOM] Price Forecast 2023-24
Sellers took advantage of the $10 psychological level that was a barrier to bullish progress. At the time of writing, ATOM had reversed a fair portion of its recent gains. If sellers reverse the $8.98 support level, ATOM could see further losses.
Defense of $8.98 support level vital for bulls
Source: ATOM/USDT in trade view
ATOM’s bullish rally from the $7.28 support level peaked at the $10 psychological level after a series of higher lows. Selling pressure in the $10 price zone drove the price down to the $8.98 support.
With the price hovering just above the main support, a successful defense of the level by bulls could fuel another bullish rally. However, if the level subsides before the selling pressure, bears could target the $8 and $7.28 levels.
A look at the chart’s indicators revealed a bearish tendency. The Relative Strength Index (RSI) remained below the neutral limit of 50 and moved into the oversold zone with a reading of 44. On Balance Volume (OBV) also fell on July 3 and has been steadily declining, indicating declining demand.
All things considered, the market structure and indicators indicated that bears would gain the upper hand in the medium to long term.
Dipping Open Interest prefers shorts
Source: Coinalyse
According to Coin analysis, ATOM open interest rates have fallen since July 10. OI fell by $6.2 million between July 10 and July 12, indicating shrinking demand in the futures market. This could limit a bullish rebound for ATOM.
How much are 1,10,100 Atoms worth today?
Likewise, the funding rate was largely negative with brief positive flashes. This indicated diminishing buying pressure. Together, this formed a bearish outlook. However, shorts should keep a close eye on BTC’s price action as a bullish rebound could devastate sellers.