Fantom: The ‘but’ of FTM’s recent rally and why traders should remain cautious

  • Fantom has a new proposal for reduce its current burn rate
  • FTM’s price increased by 30% last week

Ghosts [FTM] has seen a 30% rally in the last seven days following the publication of the proposal to reduce the current consumption rate of the network.

Read Ghost [FTM] Price Prediction 2023-24

According to data from CoinMarketCap, FTM was trading at $0.2449 at press time. A week ago, the altcoin traded hands at $0.19. The 30% rise in price put FTM above other assets such as GMX, APE, CELO and UNI, which rose by 27.12%, 22.23%, 15.18% and 14.64% , respectively.

Source: CoinMarketCap

Through its new governance proposal, titled “dApp Gas Monetization Program,” Fantom has sought to reduce its current consumption rate. It planned to do this by redirecting its fees directly to decentralized applications (dApps) hosted within the network.

According to the proposal, if the same is passed, the “implementation will reduce Fantom’s burn rate from 20% to 5% and redirect that 15% reduction to gas monetization.”

Additionally, gas monetization will “reward high-quality dApps, retain talented creators, and support Fantom’s network infrastructure.”

What Fantom has in store for you

At its current price, FTM traded at its May price level. Since the beginning of the year. FTM lost 91% of its value. As the cryptocurrency market tried to regain stability after the sudden collapse of FTX, the price of FTM embarked on an upward trend since November 19. As observed on a daily chart, the accumulation of FTM has increased significantly since then.

Over the past two weeks, FTM has moved from severe oversold to overbought at press time. As of November 19, FTM’s Money Flow Index (MFI) stood at 6.71, indicating strong selling. However, as the bulls re-entered the market and began to accumulate, the IMF continued its uptrend and marked its spot at 76.37 at press time.

Following a similar progression, the Relative Strength Index (RSI) also rebounded from a low of 38 on November 19 to rest above the neutral 50 mark at 66.45 at press time. This showed that the accumulation of FTM has increased over the past few weeks, hence the price rally, according to data from CoinMarketCap.

Moreover, buyers had control of the market at press time. FTM’s Directional Movement Index (DMI) showed that the strength of the buyers (green) at 30.75 was solidly ahead of the buyers (red) at 11.99.

The average directional index (yellow) at 26.12 showed that the strength of the buyers was solid which the sellers may find impossible to revoke in the short term.

It is important to note, however, that overbought highs are not sustainable. Moreover, with the high volatility of the current market, most markets take advantage of a rise in prices to make profits. Therefore, selling can start as soon as investors start taking profits.

Source: Trading View

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