Tornado Cash Surges 40% After OFAC Delisting, But Overbought Signals Loom

Tornado Cash (TORN) has experienced a significant surge, with its price increasing by 40% within a 24-hour period following its removal from the U.S. Treasury’s Office of Foreign Assets Control (OFAC) sanctions list. This development has sparked considerable market interest, driving the price to a peak of $11.77, which represents a 41% increase within the same timeframe. However, despite this impressive rally, analysts are cautioning about potential price corrections due to overbought conditions indicated by market indicators.

The Relative Strength Index (RSI) has crossed the 70.0 threshold, a level that historically suggests a peak in bullish momentum and often precedes swift price corrections. This overbought signal, combined with the Chaikin Money Flow (CMF) remaining in bearish territory, indicates that selling pressure is outpacing buying trends. Additionally, Tornado Cash is experiencing significant outflows, which further underscores the bearish momentum and waning investor interest.

The persistent outflows contrast sharply with the recent price rally, suggesting that without substantial capital inflows to counterbalance this trend, TORN may struggle to maintain its current valuation. Key support levels are identified at $11.63 and $9.75. A breach of these benchmarks could escalate selling pressures, potentially dragging the price down to $7.36 and erasing much of the recent gains. Conversely, if Tornado Cash can retain its bullish momentum beyond $11.63, it may test resistance near $15.81, which would invalidate current bearish sentiments and confirm the validity of recent price advancements.

In summary, while Tornado Cash has captured significant attention with its recent spike, market indicators reflect potential corrections ahead. The RSI warning signals and bearish CMF trends suggest investors should proceed with caution. Looking ahead, the ability of TORN to maintain its position above critical support levels will be vital for determining its next move in the face of ongoing market complexities.