NEAR Protocol Analysis: Probability of a Further 34% Drawdown

NEAR Protocol [NEAR] has experienced a decline of 11.38% over the past week, including a drop of 5.74% within the last 24 hours. Following heightened volatility, traders find themselves facing a bearish market sentiment. This article discusses the potential for further price declines, underlying market dynamics, and what traders should consider moving forward.

Key Takeaways

NEAR Protocol has dropped over 11% in the last week, significantly influenced by Bitcoin's volatility.
Recent price movement indicates the possibility of NEAR declining toward $0.97, below key support levels.
A price level above $1.82 would be necessary to shift the market sentiment toward a bullish outlook.
Traders should remain cautious; short-selling options appear more viable without rushing into decisions.

NEAR Protocol analysis - Why another 34% drawdown is likely for its price

Current State of NEAR Protocol

NEAR Protocol has seen a value decrease of 11.38% in the past week, with a notable 5.74% drop in just the last 24 hours. The day's losses came after an episode of high volatility when Bitcoin surged briefly to $90.2k before quickly declining to its local support at $85.7k. This 5.6% dip in Bitcoin has unsettled market sentiment, which was already leaning towards fear, forcing NEAR traders to adopt a bearish approach.

NEAR Coinalyze

Traders may have had some optimism earlier in the week, encouraged by a 13.1% increase in Open Interest in Futures from $122 million to $138 million and rising spot buying volume. The data from Coinalyze indicated a short-term bullish sentiment reflected in elevated Futures funding rates. However, this positive momentum has not persisted, leading to the question—what can traders expect next?

Market Trends and Implications of the Long-Term Range

NEAR 1-week Chart

Since March, NEAR Protocol's token has been trading within a range from $1.82 to $3.38. In the second week of December, NEAR closed a weekly session at $1.59, which is significantly below both the $1.82 range low and the long-term support level at $1.72. The consistent decline in On-Balance Volume (OBV) indicates sustained selling pressure, while the Relative Strength Index (RSI) records the altcoin’s downward momentum.

NEAR 1-day Chart

The analysis of the 1-day chart confirms the strength of the bearish trend. Both the OBV and RSI have been decreasing since the second week of November, underscoring the dominance of sellers in the market. Recent price movements indicate that the $1.82 level has been retested as resistance, illustrating that sellers are preventing any upward momentum from the bulls. Following a few days of consolidation around the $1.80 mark, NEAR displayed a further decline.

The Potential for a Bullish Reversal

At present, the likelihood of a bullish reversal for NEAR appears slim. The prevailing long-term downtrend, coupled with short-term volatility, suggests that NEAR may drop to the $0.97 long-term support level. For the market to shift towards a bullish sentiment, NEAR needs to reclaim a position above $1.82.

Trader Considerations: To Sell or Wait for a Bounce?

Traders considering a short position should avoid the fear of missing out (FOMO) stemming from NEAR's recent drop. There may be an opportunity for a bounce back to the $1.7-$1.8 supply zone, which may lead to a retest triggering further bearish momentum. A retest at this level could offer a suitable short-selling opportunity, with a daily close above $1.82 serving as an invalidation point.

Conclusion

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and reflects the writer's opinion only.