RNDR Price Spearheads 40% AI Token Rally – GRT & FET Encounter Resistance
What's Behind the AI Token Rally? | Credit: Getty Images
Key Takeaways
- AI was one of the worst performing crypto sectors in April.
- A nearly 40% AI token rally is ongoing since the May 1 lows.
- Will RNDR continue leading the rally for the rest of May?
AI tokens were hit the hardest during the crypto market correction starting in March, falling by 55% after their yearly highs. Unlike other baskets, AI tokens did not create a higher low, rather fell to a lower low in May.
Despite this correction, AI tokens are experiencing a rally led by RNDR, bouncing by 40% since their lows. The fact that they are still trading inside an important resistance level leads to the question if they can break out and confirm the reversal, or if new lows will emerge instead.
AI Token Rally Trail Only Memecoins
Memecoins have been the best performing narrative throughout most of the year. In March, they were leading the crypto market, followed by Gaming Tokens. However, they underperformed in April, while large cap Layer-1 tokens flourished.
This gives rise to the possibility that more speculative investments such as memecoins perform better during positive market movement, while more established projects outperform them during corrections.
This hypothesis is strengthened when looking at the recovery since May 5. The memecoin basket (red) has increased over 30%, followed by the AI token basket at 21% (white). No other narrative has increased by double digits. Interestingly, Layer-1s are the worst performer so far in May.
While AI tokens are not nearly as speculative as memecoins, they are smaller caps compared to other sectors such as Layer-1 or Ethereum betas. Out of the AI token basket, only NEAR Protocol is ranked in the top #20 cryptocurrencies based on their market capitalization.
Who is Leading the Charge?
The basket of AI tokens has rallied by nearly 40% since its May 1 lows, reaching a descending resistance trend line in place for 49 days. The reason for the difference in the increase relative to the previous section is that the multiple narrative comparison measures the price from the daily close instead of the absolute wick low.
The trend line has existed since the correction started on March 18. So, a breakout from it will confirm the correction is over.
Despite the lack of a breakout, the price action is bullish due to the reclaim of the $60 horizontal support and the 0.618 Fibonacci retracement support level.
Looking at the price movement of the tokens creating this basket, RNDR is the clear leader (blue), followed by GRT (yellow).
Because of the ASI merger, the AGIX & OCEAN prices are likely to remain the same until the merger on May 24. Also, FET will likely maintain a price of 2.43 times that of AGIX & OCEAN. This explains their extremely similar rates of increase.
Interestingly, NEAR has shown the smallest recovery since May 1, even though it was the biggest gainer from AI tokens in April. One of the reasons for this could be that NEAR reached its bottom on April 13 and then created a higher low in May, unlike the other tokens who bottomed on May 1.
RNDR Double Bottom Leads to Breakout
The RNDR price action shows numerous bullish signs, starting from the double bottom pattern created between April 13 and May 1. The double bottom was combined with bullish divergence in the daily RSI and MACD, bolstering its significance.
After the double bottom, RNDR broke out from a descending resistance trend line and then reclaimed the 0.382 Fib retracement resistance level and a horizontal resistance area at $9.15.
On top of this bullish price action, the RSI increased above 50 while the MACD moved above 0. So, all signs point to a continued RNDR price increase. If this happens, the next resistance will be at $12, an increase of 20% measuring from the current price.
Conversely, closing below $9.15 will put the upward trend at risk. Then, RNDR could fall 25% and validate the resistance trend line at $7.50.
GRT Creates Bullish Pattern but Still Trades Inside Resistance
The GRT price movement shares many similarities to that of RNDR. More specifically, both have created similar double bottom patterns combined with bullish divergences (green). The GRT double bottom led to a breakout from its descending resistance trend line.
However, the main difference lies in the fact that GRT has not broken out from the $0.30 horizontal resistance area. If it does, the next resistance will be at $0.42, 35% above the current price.
On the other hand, failure to break out can lead to a retest of the resistance trend line at $0.25. While this will not invalidate the hypothesis that the correction is over, it will put it at risk if GRT closes below the resistance trend line.
FET Shows the Weakest Price Action Out of the Three
Since FET will serve as the reserve token for ASI, its price action can dictate that of OCEAN & AGIX. So, an analysis of it can be used as a benchmark for both OCEAN & AGIX.
The FET price movement is similar to that of GRT, but slightly less bullish. The reason for this is that the double bottom pattern has not been combined with bullish divergences in the RSI nor MACD.
The price action shows that FET created a double bottom pattern and broke out from a descending resistance trend line. However, similarly to GRT, the price has not broken out from the $2.50 resistance area yet.
If this happens, it will confirm the bullish trend. This can lead to an increase to the next resistance at $3.05, an increase of 20%. Due to its inability to break out and the absence of bullish divergence, FET’s bullish prospects seem less promising in comparison to RNDR and GRT.
AI Tokens at an Important Level
Despite a notable increase since May 1, the basket of AI tokens still trades at a critical resistance level. So, confirming the bullish trend reversal requires further validation. This is also visible when looking at the individual price movement of different AI tokens. RNDR is the exception, who on top of pacing AI tokens has broken out from its main resistance area.
