- Monero and other altcoins have bounced back in the past few days.
- This rebound could be a dead cat bounce or a relief rally.
Monero price bounced back during the weekend as a calm mood spread in the crypto market. After plunging to $137 on Friday amid historic liquidations, the coin rebounded to $147.50. This price action is similar to that of other altcoins like Stellar, Flare, and Tron.
XMR recovery concerns remain
Monero, like other cryptocurrencies, went through their worst week this year, with Bitcoin slumping by more than $3,000. Some analysts believe that the bearish breakout was a start of a longer bearish cycle in the crypto market.
On the other hand, others believe that the plunge was merely a shakeout, which was necessary for cryptocurrencies to move out of consolidation. A shakeout is a situation where a financial assets drop sharply and the resume the bullish trend.
There are several reasons why Monero and other cryptocurrencies plunged last week. First, the decline was in sync with that of other financial assets. For example, the bond market sell-off intensified, pushing their yields to the highest level in more than a decade.
In all, global bond investors lost billions of dollars as investors predicted that the Federal Reserve will need to hike interest rates in September. The case for a hike is supported by the relatively strong economic numbers from the US.
Stocks also pulled back, with some of the most popular names like Apple and Tesla retreating by double-digits from their highest level this year. The Dow Jones, Nasdaq 100, and S&P 500 indices have dropped by over 4% from the YTD high.
Second, Monero and other cryptocurrencies dropped because of concerns about China’s slowdown. Country Garden and other big real estate companies are on the verge of collapse. At the same time, most people in China have moved to a balance sheet reduction, where they focus more on reducing their balance sheet.
Finally, Monero price dropped after Bitcoin lost the important support level that I wrote about here.
Monero price forecast
The daily chart shows that XMR price plunged hard last Friday and reached its lowest level since June 20th. It then bounced back and is now approaching the psychological level of $150. Despite this rebound, Monero remains below the 50-day and 25-day moving averages.
I suspect that this comeback is part of a dead cat bounce (DCB). A DCB is a situation where an asset bounces back briefly after experiencing a deep plunge. It happens as some investors attempt to buy the dip. In most cases, the price then resumes the downward trend. In Monero’s case, this decline could see it retest the important support at $131.76 (June 14 low) and ~10% below the current level.
