Fetch.ai (FET) price has cleared important resistance at $2.50, but the expected rally may not take off and a bearish trend is expected to happen. Meanwhile, Investors are expecting Fetch.ai (FET) to continue its growth, but they may be disappointed. The popular AI token is at risk of coming under selling pressure as it has already reached a market top.
Fetch.ai (FET) Faces Potential Downturn Despite Recent Breakout
A bullish breakout from consolidation and a breakout of a key resistance level indicate the possibility of a rally. However, the situation is complicated by the fact that Fetch.ai (FET) formed a market top this week.
A market top is the highest point in an asset’s price before a significant decline. It indicates the peak of bullish activity has been reached. This is usually accompanied by corrections as the market cools and investors begin to sell. However, a top in the market is formed when the on-chain metric of the share of coins in profit crosses the 95% threshold. This is exactly what happened with FET: now 95.3% of the circulating supply of tokens is profitable.
The price divergence and daily active addresses transacting on its network (DAA) indicator also points to a similar scenario. Divergence occurs when the price of a cryptocurrency and its DAA move in opposite directions. This suggests a potential mismatch between market valuation and network usage.
Typically, when the price rises and network participation declines, this is a signal to sell. In the case of FET, this condition is met, which could potentially trigger sales to take profits.
FET Forecast: Bearish dynamics
The price of Fetch.ai broke through the $2.50 resistance and reached $2.58, showing almost 18% growth in three days. This allowed the altcoin to exit a month-long consolidation, but FET may soon return to it.
This is due to the above-mentioned factors, which spell a bearish scenario for the price. Accordingly, Fetch.ai could lose support at $2.50 and fall to $2.26 or lower. On the other hand, a bounce from the $2.50 support could lead to sideways movement while the market cools. Such dynamics can support the price while demand remains high, refuting the pessimistic forecast.
