Bittensor’s (TAO) price action faced a sharp rejection around the $329-resistance recently, putting an end to the altcoin’s bullish momentum. Soon after, the token recorded three consecutive days of losses, including a decline of 10% in just 24 hours.
This correction may be evidence of profit-taking after TAO’s strong gains last week. Especially as traders locked in profits near the key resistance level.
Can EMA support halt the decline?
On the daily chart, the nearest EMA support zone below the press time price stood out as the key level for buyers to defend. At the time of writing, TAO was trading at $287, just 3 days after it closed above the previous swing high at $289.
A hold above this dynamic support could give TAO some room to stabilize after the recent sell-off. However, a decisive break below the EMA could expose the token to deeper downside as selling pressure builds.
The altcoin’s long-term trend still seemed bullish though and it was trading above key EMAs. This suggested that bulls still enjoyed some relevance in TAO’s market.
Falling Open Interest adds pressure
TAO’s derivatives market has also been showing signs of weakening demand, with its Open Interest declining to coincide with the price fall. At press time, the network’s Open Interest had shrunk by 10% to $502 million over the last 24 hours.
Now, TAO’s Open Interest has been on a steady decline over the last three days. At the same time, long liquidations have increased too, indicating that leveraged bullish positions are being forced out as the correction deepens.
At press time, the network’s long liquidations stood at $1.7 million, significantly outnumbering its short liquidations which amounted to $91.6K.
What’s next for TAO?
If Open Interest continues to shrink while long liquidations accelerate, the selling pressure could persist until leveraged positions are cleared.
All in all, the combination of a failed resistance breakout, declining Open Interest, and rising long liquidations leaves TAO at a key technical juncture.However, whether EMA support can absorb the selling pressure will determine if the correction stabilizes or extends further.
Final Summary
- TAO extended its bearish run after rejecting the $329-resistance.
- Network’s Open interest declined across the board as long liquidations increased.
