DEEP Token Drops 22% After 430% Rally, Bearish Sentiment Prevails

DeepBook Protocol’s DEEP token has experienced a significant price correction following a substantial rally. The token, which had surged by over 430% in recent times, is now showing signs of exhaustion and potential downside movement. The $0.157 level has emerged as a critical support zone that traders are closely monitoring.

Bearish sentiment is prevalent among traders, as indicated by the OI-Weighted Funding Rate, which stands at -0.2448%. This negative rate reflects the bearish pressure from short-leaning traders, suggesting a growing likelihood of a near-term sell-off. The bearish outlook is further supported by on-chain metrics, which show a significant outflow of DEEP tokens from exchanges, totaling $870K over 48 hours. This outflow suggests potential accumulation by investors who are taking advantage of the price correction.

Technical analysis also points to a potential correction. The daily chart reveals a bearish engulfing candlestick pattern at the local top, a classic reversal signal. If this pattern confirms, DEEP could drop by over 22%, with the $0.157 level acting as the next key support zone. Momentum indicators, such as the Relative Strength Index (RSI) and the Chaikin Money Flow (CMF), further support this bearish outlook. The RSI is at 78, indicating overbought conditions, while the CMF is at -0.05, suggesting outflows and mounting sell-side pressure.

Despite the bearish indicators, some investors and traders are closely monitoring the asset and even accumulating it. The significant outflow of DEEP tokens from exchanges suggests that some market participants are taking advantage of the price correction to build their positions. However, unless accumulation grows stronger, a corrective move might be unavoidable before the next leg up. The current price momentum and the fall in open interest indicate strong bearish momentum, with 19% of DEEP traders’ positions being liquidated due to the price decline.