SUSHI won’t make it above $1.5, on-chain metrics say

  • SUSHI token has been growing strongly since the beginning of September.
  • The fundamental factors behind SUSHI growth are set to expire.
  • On-chain and technical indicators signal that the token is unlikely to clear $1.5 resistance.

SUSHI is the talk of the town again. The infamous token value nearly doubled in the past seven days, driven by the strong demand from the so-called yield farmers. SUSHI topped at $1.5 on November 16 and retested the critical support of $1 on November 18. At the time of writing, the token is trading at $1.34, mostly unchanged on a day-to-day basis. 

SushiSwap enjoys a positive fundamental setup

SushiSwap is an automated market-maker that allows users to earn SUSHI tokens by staking their assets in the liquidity pools. The anonymous creator of the project, aka Chef Nomi, forked Uniswap protocol, made some improvements and launched it at the end of August to the much excitement of the yield farming community.

Less than a week after the launch, the creator dumped half of the project’s $27M developer fund onto the market, triggering a momentary panic and a SUSHI price collapse. The token crashed from an all-time high of $47 and bottomed at $0.45 on November 5. 

However, in a surprise twist, it managed to get back above $1 amid a combination of positive fundamental developments.

First, the DeFi investment environment improved significantly due to the general revival of the cryptocurrency market. Just as the tide lifts all boats, the excitement on the market creates buying opportunities for many coins. The total value locked (TVL) on the DeFi platforms increased from $11 billion at the beginning of November to a new record high of $13.95 in less than two weeks. 

SushiSwap's TVL

SushiSwap’s TVL

Second, SushiSwap is the primary beneficiary of Uniswap’s liquidity mining program expiry. Since November 14, the total value Locked in SushiSwap increased nearly fourfold, from $280 million to over $1 billion, while Uniswap lost 2/3 of its TVL. Notably, SushiSwap is now the sixth-largest DeFi protocol, right after Uniswap. 

However, the situation may change pretty soon, as Uniswap team launched a poll to decide whether the liquidity mining program should be extended for another two months. The vote ends today at 11 PM UTC. Currently, 97% of holders voted for the proposal and 3% are against it. 

If the Uniswap’s community votes for going on with liquidity mining, which looks like a ‘fait accompli’ now, SushiSwap may lose some of its lustres.

On-chain metrics send warning signals

While the are no apparent signs of the upcoming price reversal, several on-chain metrics look alarming. Thus, the number of daily SushiSwap deposits hit the highest level in two months, meaning that traders have been actively moving their SUSHI tokens to exchanges. In most cases, such a trend is a precursor of a big dump. 

SUSHI's daily active deposits

SUSHI’s daily active deposits

Moreover, the data from Santiment, a behavioural analytics company, shows that exchange inflow is also at 2-month high levels. In recent hours traders moved nearly $2.5 million worth of SUSHI to the cryptocurrency trading platforms, meaning that the speculators may be ready to book profits.

SUSHI's exchange inflows

SUSHI’s exchange inflows

SUSHI price forecast 

Meanwhile, from a technical point of view, SUSHI sits on top of a significant support area. IntoTheBlock’s “In/Out of the Money Around Price” model reveals that nearly 580 addresses had previously purchased almost 76 million SUSHI between $1.22 and $1.26. Such a significant supply wall could absorb the selling pressure trigger the next bullish wave. In this case, the price may quickly recover towards $1.45-$1.5, with no resistance on the way.

SUSHI In/Out of the Money Around Price

SUSHI In/Out of the Money Around Price

Meanwhile. the charts show that SUSHI bulls might face a strong resistance on approach to $1.45. This area limited the recovery attempts at the end of September and also stopped the upside in November. Once it is out of the way, the upside is likely to gain traction with the next focus on $2.

SUSHI/USD, 12-hour chart

SUSHI/USD, 12-hour chart

A rejection at the above-said $1.45 will increase the selling pressure and push the price towards $1.22. Once it is broken, SUSHI price can extend the decline towards the psychological $1.

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