Here’s Why It Could Drop to $65
The price of OKB experienced a remarkable increase of 15% today, August 20, continuing the upward momentum that began last week following OKX’s significant token burn announcement.
Summary
- The price of OKB has resumed its upward trajectory, approaching its monthly peak.
- However, it faces potential risks of a decline as the funding rate shifts into negative territory.
- Wyckoff analysis suggests it may transition into the distribution phase.
OKB (OKB) reached a peak of $140, marking a 220% increase from its lowest point this year, which brought its market cap to $2.9 billion. The daily trading volume surged to $330 million. Nevertheless, this rally may be nearing its end as the funding rate has turned negative.
OKB Price Faces Risk with Negative Funding Rate
OKB, the flagship token of OKX, a prominent cryptocurrency exchange, surged last week after developers revealed significant changes to its tokenomics and technological framework.
OKX transitioned to Polygon’s X Layer, enhancing transaction throughput to 5,000 TPS, decreasing gas fees, and bolstering security and compatibility. Reports indicate that over 90% of OKX tokens have successfully migrated to the X Layer.
The developers also retired OKTChain due to its redundancy with X Layer. Crucially, they reduced the circulating supply of OKB tokens to 21 million by executing a one-time burn of 65.2 million repurchased tokens.
The next potential driver for OKB’s price is the speculated OKX IPO in the United States, expected this year following the successful IPOs of Circle and Bullish.
Nevertheless, in the immediate term, the OKB token may face a reversal due to the declining funding rate. CoinGlass data indicate that the eight-hour funding rate fell to -0.011%, its lowest since August 17. A declining funding rate typically suggests that investors expect future prices to decrease.
Technical Analysis of OKB Token
The daily chart illustrates that OKB price surged last week following the token burn announcement. Prior to this, it had been consolidating for an extended period, corresponding to the accumulation phase of Wyckoff theory.
The surge was part of the markup phase, marked by heightened demand and fear of missing out. Consequently, there is a possibility it will soon transition into the distribution phase and experience a downturn.
Additional indicators, such as the Relative Strength Index and the Stochastic Oscillator, reveal that it is currently overbought. Furthermore, it has rallied significantly above both the 50-day and 100-day moving averages, indicating a potential for mean reversion.
If a downturn occurs, the OKB price could plummet to the support level of $64, which reflects the swing high from November of last year.