Key Takeaways
The SUI price has dropped by 35% in the last 30 days after posting a performance that was in stark contrast to the highs it reached on Jan. 4.
As a result, the token of the layer-1 blockchain now trades at $3.42. Although cryptocurrency holders will hope that this decline marks the bottom, according to several indicators, that is not the case.
While SUI holders might remain optimistic about a rebound, traders do not share the same view. This is according to the funding rate’s position.
The funding rate represents the cost of maintaining an open position in the derivatives market. When it is positive, it indicates that the perpetual contract price is trading at a premium above the spot price.
In this case, traders holding long positions pay funding fees to those holding short positions. On the other hand, a negative funding rate indicates that the perpetual price is trading at a discount below the SUI spot price,
This means that short sellers pay funding fees to long-position traders. According to Santiment, SUI’s funding rate is -0.01%. This indicates that short sellers dominate the market, with many traders anticipating a price decrease for the altcoin.
Should longs remain out of the picture, SUI’s price might find it challenging to extend its rally despite rising by 8% in the last 24 hours.
From a technical perspective, the Bull Bear Power (BBP) has dropped to the negative region and flashed red histogram bars. The BBP measures the strength of buyers (bulls) compared to the strength of sellers (bears)
Bulls have the upper hand when the reading is positive, and the price can increase. However, the negative reading indicates that bears have the leverage in this case.
If this remains the same, SUI’s price might undergo another correction.
On the daily chart, SUI’s price has dropped below the 0.50 Fibonacci retracement level. This indicates that the altcoin does not have strong support to back up the price action.
Due to this, the weakness recently exhibited might continue. In addition, the Moving Average Convergence Divergence (MACD) has dropped to a negative reading.
Likewise, the 26-day Exponential Moving Average (orange) remains above the 12 EMA (blue). This position reinforces the bearish outlook around SUI.
Should this trend continue, SUI’s price might experience a sharp fall, which could lead to a 25% decline. If so, the token could slide to the 0.236 Fibonacci level at $2.49.
However, if bulls defend the price from sliding below the 0.382 Fibonacci retracement, this downtrend might not materialize. Instead, the token could jump to $4.56.