yEarn Finance, previously known as iEarn Finance, has stolen the spotlight of the cryptocurrency market. Following the launch of its governance token, YFI, in late July, this altcoin has done nothing but shot up.
Although it debuted in the market trading at a low of $31.65, the price of this cryptocurrency has appreciated over 34,363.7% since then. The so-called “valueless” governance token recently rose to a new all-time high of nearly $11,275. But different technical and fundamental indexes suggest that it is poised to retrace.
YFI Is Bound to Pull Back
yEarn Finance’s meteoric price action has not gone unnoticed. Data from LunarCRUSH reveals that over the past 24 hours, more than 4 million YFI-related mentions have been registered throughout different social media networks. More importantly, roughly 60% of all the social interactions have been bullish about this altcoin.
The rising chatter around this cryptocurrency allowed it to move to the number six spotonSantiment’s Emerging Trends list, which is a historically negative sign.
Dino Ibisbegovic, head of content and SEO at Santiment, maintains that when the crowd pays increased attention to a given cryptocurrency because of an ongoing pump, it is usually followed by a pullback.
“Within the next 12 days after a coin claims a top 3 position on our list of Emerging Trends, its price drops by an average of 8.2 percent. Based on our study, once the increased crowd attention subsides (which usually happens in a matter of hours/days), a short-term price correction – or consolidation – is often a likely outcome,” said Ibisbegovic.
The Chatter Around YFI Explodes. (Source: Santiment)
The Tom Demark (TD) sequential index adds credence to the pessimistic outlook. This technical indicator is currently presenting a sell signal in the form of a green nine candlestick on YFI’s 6-hour chart. The bearish formation forecasts a one to four candlestick correction before the continuation of the uptrend.
Given the TD setup’s accuracy to time local tops on yEarn Finance’s trend, the current sell signal must be taken seriously despite the losses already incurred.
TD Index Forecast Bearish Impulse for YFI. (Source: TradingView)
Stiff Support Ahead
In the event of a correction, IntoTheBlock’s “Global In/Out of the Money” (GIOM) model reveals that the most crucial supply wall underneath yEarn Finance sits at $5,700. Here, roughly 244 addresses had previously purchased nearly 16,000 YFI.
This crucial area of interest may have the ability to absorb some of the selling pressure. Holders within it would likely try to remain profitable in their long positions. They may even buy more tokens to avoid seeing their profitable investments go into the red.
Massive Support Level Ahead of FYI. (Source: IntoTheBlock)
It is worth mentioning that yEarn Finance is currently in price discovery mode. Thus, the probability of a further advance cannot be taken out of the question. The Fibonacci retracement indicator estimates that this cryptocurrency may rise towards $13,000 if buy orders continue piling up.
Featured Image by Depositphotos Price tags: yfiusd, yfibtc Chart from TradingView.com