Zilliqa’s native crypto ZIL enjoyed a healthy bullish performance during the weekend, pushing it up by roughly 52% from its 12 May bottom. The token’s rally comes at a time when most of the top cryptocurrencies are experiencing a lot of sideways action.
ZIL traded at $0.061 at the time of writing, after a 19% rally in the last 24 hours. What’s even more impressive is its 52% rally from its latest local low of $0.039 on 12 May. The latter was the bottom of the latest bear market, leading to a bit of a cool down. However, the markets seem to have stagnated after that, as selling pressure subsided.
The lack of significant buying pressure means any subsequent rallies have been subdued. This was also the case for ZIL but it appears to be pulling a healthy rally. The real question is whether the rally is sustainable or whether it will pave the way for another strong correction.
ZIL’s 50-day moving average remains above the 200-day MA, although currently showing signs of more downside. The two indicators formed a golden cross in mid-April and while a major rally attempt was made, the price has remained overall bearish. If the price was to maintain its ongoing rally, it would have to rally by roughly 36% from its current position to its next Fibonacci level at $0.085.
Source: TradingView
On the other hand, a retest of its latest low would require a 32% drop from its current level. ZIL’s RSI is currently approaching the neutral level where it will most likely encounter some downward pressure. Its MFI highlights healthy accumulation and the DMI suggests that a continued uptrend would confirm the return of strong bullish momentum.
Can ZIL sustain the current rally?
On-chain metrics can provide a better overview of the current conditions and provide insights into the rally’s sustainability. ZIL’s market cap registered a significant upside in the last few days, but the supply held by whales has not registered any significant upside. This might be a sign that the ongoing rally is mostly supported by the retail market.
Source: Santiment
A lack of interest by the whales means ZIL’s rally might be due for some downward correction as some investors take profit. The current rally was fueled by accumulation on the heels of Zilliqa’s Web3 alliance launch on 19 May. The development activity metric registered significant activity in the days leading up to the announcement.
The current market outlook suggests a significant likelihood that the market may slide lower in the next few weeks. This explains why whales and institutions are cautious. However, an unexpected market recovery might allow ZIL to hold on to its current gains and extend its upside.
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