XTZ holders, especially those who purchased near the bottom of the bear market in June, are up a tad over 60%. However, the cryptocurrency just touched its first major resistance level. This means a substantial pullback might be on the cards this weekend.
XTZ has so far managed to push as high as $1.94 this month. This represents a 62% upside from its lowest price point in 2022. Its $1.88 press time price seemed to reflect the greater selling pressure at that price range, leading to a slight retracement on the charts. The selling pressure in question was fueled by the 0.236 Fibonacci level.
What should we expect from XTZ at the said level?
Prices often push past Fibonacci retracement lines, but only if there is enough momentum to maintain the trajectory. However, a chance in price characteristics within the Fibonacci range might be a sign that the price is about to pivot.
One of those signs is the outflows in market cap near the $1.75 billion level. The market cap highlighted a double rejection of the upside within the same range, thus confirming a strong resistance zone.
Source: Santiment
XTZ has already lost roughly $500 million after its second retest of the same zone. This aligned with investor sentiments which have been volatile since 5 August. This was around the same time that XTZ’s price action pushed into the Fibonacci retracement zone.
FTX’s Funding Rate underscored the weakening investor sentiment. However, it also highlighted some sentiment recovery, which seemed to be in line with XTZ’s resilience against the downside at its press time level.
Source: Santiment
Tezos blockchain leans heavily towards the NFT market. This means its NFT volumes can give us a decent measure of the level of demand for XTZ at any given point. The higher the NFT volumes, the higher the demand for the altcoin.
The network saw healthy growth in NFT trade volumes over the last 2 weeks. The aforementioned finding corresponded with the healthy price growth seen during this period. However, NFT volumes have tanked slightly since 10 August. In other words, NFT volumes may fail to provide significant demand to support the price.
Conclusion
XTZ’s outlook suggests a high probability of a pullback. However, this is not necessarily a guarantee. XTZ is already demonstrating some resistance against the bears. Market conditions may also turn out in favor of the bulls, in which case XTZ might continue its rally on charts.
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