ICP -88.42% 24-Hour Drop Amid Sharp Corrections

On SEP 1 2025, ICP dropped by 88.42% within 24 hours to reach $4.887, marking one of the most severe short-term corrections in recent memory. Over the past week, the token has fallen by 617.78%, and the monthly loss exceeds 88.42%. Year-on-year, the decline is over 5236.26%, underscoring a dramatic bearish reversal in market sentiment and a broader reassessment of the asset’s fundamentals.

The rapid price dislocation reflects a confluence of factors, including increased selling pressure from large-cap investors and a lack of stabilizing inflows from institutional buyers. The correction appears to be part of a larger pattern of bearish momentum, with multiple technical indicators aligning to signal a deepening downturn. The Relative Strength Index (RSI) has dropped below key support levels, while the Moving Average Convergence Divergence (MACD) has turned negative, reinforcing a bearish outlook.

Additional bearish signals include a breakdown below key long-term moving averages and a widening gap between price and volume. These dynamics are typically observed in markets undergoing forced liquidation and deleveraging. The absence of a clear bottoming pattern suggests that volatility and downward momentum are likely to persist in the near term, unless there is a significant influx of new capital or a structural shift in market dynamics.

Backtest Hypothesis

To evaluate the potential effectiveness of strategic interventions during such sharp corrections, a backtesting strategy was applied using historical price data and technical indicators. The hypothesis centered on using a combination of RSI divergence and 50-period EMA (Exponential Moving Average) crossovers to identify potential entry points after the peak of a bearish wave.

The strategy was designed to enter long positions only when RSI showed a bullish divergence (higher lows on price, lower lows on RSI) and the price crossed above the 50-period EMA after a sustained bearish trend. The exit rule was based on a trailing stop-loss of 5% to lock in gains and limit further downside exposure.

While this approach is not a guarantee of profitability, it was tested to assess whether a disciplined, rule-based strategy could mitigate the impact of extreme corrections like the one seen in early September. The backtest results, while not included here, will serve as the foundation for future risk management frameworks in high-volatility environments.