Stacks (STX) took away a significant portion of the gains it posted on March 10, as the euphoria surrounding its $165 million pledge to support Bitcoin (BTC) projects showed signs of fading.
The price of STX fell more than 30%, reaching as high as $1.33 on Friday, as measured from the week’s high of $1.94. The sell-off appeared technical in part as the $1.94 top fell in the same range that served as a solid support between October 2021 and January 2022, only to later flip and become a resistance area.
STX/USD daily price chart. Source: TradingView
It also appears that traders saw selling opportunities thanks to STX’s long wick candlestick on March 10. Stacks rose as much as 73% over the course of the day as they formed a disproportionately long bullish wick on the daily chart, signaling upward exhaustion.
What pushed STX higher?
The rally in the STX market on March 10 coincided with the launch of “Bitcoin Odyssey,” a $165 million fund to fund Web3, decentralized finance (DeFi), and nonfungible token (NFT) projects on the Bitcoin blockchain. by leveraging the open source network for Bitcoin-based smart contracts.
We couldn’t be happier to announce that we’ve partnered with @Okcoin and @StacksOrg to launch $165 million ecosystem fund to invest in Web3, Defi and NFTs on Bitcoin!https://t.co/VUDyEIHn8P through @cointelegraph
— trevor.btc (@TO) March 10, 2022
Notably, STX serves as a utility token within the Stacks ecosystem to pay for network activity and contract execution. STX owners can also stake their holdings on the Stacks network through “Stacking” to support the blockchain consensus mechanism. In return, they earn BTC rewards.
It seems that traders flocked to buy STX in anticipation of a surge in demand after the Bitcoin Odessey launch. For example, cryptocurrency exchange OKcoin, the main lender behind the $160 million fund, promoted the Stacks token due to its bullish outlook, proverb it’s “not a bad time to get on” Stacks.
All-time high ahead?
Interestingly, STX’s ongoing price rally appeared at a confluence of two key support levels, at least one of which suggests the Stacks token is headed for an all-time high.
This confluence includes an upward descending trendline that has acted as an accumulation point for traders since early 2020 and made the 0.5 Fib line (nearly $1.50) of the Fibonacci retracement chart from $0.04 swing low to $2, 82 swing high.
STX/USD Weekly Price Chart. Source: TradingView
STX now appears to be closing above its two intermediate exponential moving averages (EMA) – the 20-week (green) and the 50-week (red) EMAs – following the rebound from the dual-support area. A successful breakout could cause the Stacks token to test an uptrend line again that has served as a resistance level since 2020.
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Conversely, a pullback in the 20-50 EMA resistances could cause STX to dip below the rising trendline support towards the 0.786 Fib line near $0.63.
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