CHZ Price Bounces 35% as Chiliz Hard Fork Launches on Testnet

Key Takeaways

• On April 29, Chiliz launched its Dragon8 hard fork on the testnet.
• The CHZ price bounced at a long-term horizontal and diagonal support.
• After nearly two months, is the CHZ price correction finally complete?

The CHZ price has corrected over 30% since reaching its yearly high on March 1. The price created a lower high on April 9 and accelerated its rate of decrease with a sharp plunge.

CHZ has increased 35% since its low on April 13, saving a breakdown from a 200-day ascending support line. Can the bullish momentum continue in May, leading to a new yearly high and confirming the correction is over?

What’s New in the Chiliz Hard Fork?

In February, Chiliz announced  the roadmap for 2024, starting with the Dragon8 hard fork. The major feature is the change in tokenomics, which will include a gradually decreasing inflation and a burn mechanism.

Chiliz’s circulating supply is fully vested, meaning that the 8.888 billion maximum supply has been reached. However, the team believes that there is a problem with the lack of allocatable inflation to reward ecosystem contributors.

So, the Chiliz team has introduced a new tokenomics structure  with a decreasing year-to-year inflation. Inflation will start at 8.80% and will fall to 1.88$ after 14 years. The new maximum supply is 15 billion, a 70% increase from the current supply.

65% of the new tokens will go to validators, 25% to the ecosystem and 10% to the community vault.

Furthermore, the announcement includes clubs becoming validators on the Chiliz chain and the launch of a decentralized exchange, JalaSwap. PSG will be the first team who is a node validator and has pledged to conduct regular PSG fan token buybacks with its revenue. This can serve to reduce the supply and in turn increase the price of the fan token.

Finally, the decentralized exchange will include a CHZ burn mechanism, though its details have not been made public yet.

Yesterday, the team announced that the Dragon8 hardfork launched on the testnet. It also gave more details about the burn mechanism, stating that the gas fees will be burned and giving an 11.44% APY for validators .

According to the team, the new tokenomics encourage community involvement, facilitate a sustainable expansion and enable long-term ecosystem funding.

CHZ Bounces at Long-Term Support

The weekly time frame chart shows that the CHZ price has fallen under a descending resistance trend line for 875 days. While doing so, it decreased below the $0.085 horizontal support area, falling to a low of $0.053 in October 2023.

However, it started an upward movement shortly afterward, reclaiming the area and reaching the descending resistance trend line. Despite two failed attempts at a breakout (red icons), CHZ bounced at the $0.085 area, validating it as support and starting an upward movement.

Technical indicators give mixed readings. While the RSI has bounced at 50 (green circle), the MACD has made a bearish cross (red circle). So, a look at the daily time frame is needed to determine the future trend’s direction and see if the price will break out from the long-term resistance.

CHZ Price Prediction: How Long Will the Bounce Continue?

The daily time frame chart shows that CHZ has increased alongside an ascending support trend line for 200 days. On April 13, it rebounded off the trend line, aligning with the prior bounce at the long-term horizontal support area. CHZ has increased 35% since.

Similarly to the weekly time frame, technical indicators do not confirm the trend’s direction. The MACD & RSI are both increasing, but the former is below 0 and the latter is below 50.

However, the wave count suggests the bottom is in. This is because the price has completed an A-B-C corrective structure that started with the yearly high of $0.167 in March.

If so, the CHZ price has begun a new upward movement that will lead to a new yearly high. If it happens, the move will also cause a breakout from the long-term descending resistance trend line. The first resistance is at $0.12, while the second at $0.16. The wave count remains valid as long as CHZ does not close below the ascending support trend line.

CHZ Correction Could be Over

To conclude, the CHZ correction could be complete after nearly two months. The price has bounced at long-term horizontal and diagonal support levels, and the wave count suggests the price has started a new upward trend. A breakout above $0.12 will go a long way in confirming this possibility.