RUNE Price Slumps to 20-Month Low Amid 60% Liquidity Crash on THORChain

Key Takeaways

• RUNE has dropped to $1, its lowest price since August 2023, after breaking down from critical support.
• According to THORChain’s Q1 report, liquidity has plunged from $329 million to $127 million.
• The decline in liquidity resulted from decreased demand for RUNE despite $20 billion in swap volume.
• RUNE’s price is likely to break down the $1 horizontal support, as this could send the value toward $0.83.
• Interested in buying or selling THORCHAIN RUNE? Read our review of the best exchanges to buy and sell THORCHAIN RUNE.

The price of RUNE, the native token of the decentralized liquidity protocol THORChain, has plunged to its lowest level this year.  This performance has raised alarm bells about the future of the cryptocurrency.

However, RUNE’s price is not the only aspect of the cross-chain protocol that has experienced a notable decline. Beneath the surface of the many red candlesticks is a sharp decline in liquidity on THORChain.

As capital continues to exit, the protocol accelerates, and this analysis examines what lies ahead for RUNE.

THORChain on the Ropes

THORChain released its first quarter (Q1) report on Tuesday, April 9. According to the report, it processed nearly $20 billion in trading volume with swaps, mostly between Bitcoin (BTC), Ethereum (ETH), and RUNE.

However, it revealed that liquidity on the chain declined from $329 million to $127 million within the same quarter — a 60% drop.

“Liquidity on the network decreased from $329 million to $127 million, while liquidity providers earned $14.41 million in fees, with 91.36% of earnings derived from swap fees and 8.64% from block rewards. The top swap routes by volume were BTC, ETH, and RUNE,” The report stated.

From CCN’s findings, the decline in liquidity occurred due to the cautious approach of market participants. As a result, demand for RUNE also decreased.

RUNE Slips Below Key Support

The decrease in demand and rising selling pressure caused RUNE’s price to crash to $1. While this represents a yearly low, it also indicates the lowest the cryptocurrency has reached since August 2023.

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On the weekly chart, RUNE’s price fell to this low after bulls failed to defend support at $3.02. Amid this decline, the Relative Strength Index (RSI) is down to 31.99, indicating bearish momentum.

If unchanged, RUNE might experience another drawdown far below the $1 mark. In addition, the Chaikin Money Flow (CMF), as seen above, has dropped below the zero signal line, indicating rising distribution.

Should this trend continue, RUNE’s price might fall to levels last seen during the 2022 bear market.

RUNE Price Crash to Continue

During the daily timeframe, RUNE’s price is still confined to a descending triangle. As seen below, the horizontal support lies around $1.

Furthermore, the Awesome Oscillator (AO) has dropped below the zero line. The position of this indicator signifies bearish momentum around the cryptocurrency.

Should the AO reading fail to turn positive, RUNE’s price might decline to $0.83, with the potential to fall further. However, in a bullish market condition, RUNE might overturn this expected correction.

In that scenario, the token might see a jump toward the $3.33 mark near the 0.236 Fibonacci level.