Despite a series of token burns across the Socios token fan ecosystem, the price of Chiliz (CHZ) dropped 8% on April 20 and continues to drop nearly 2% today. Downside fears are intensifying as CHZ holders face selling pressure on exchanges. So, can the altcoin hold the $0.12 support level?
CHZ is the native token of the Chiliz blockchain, powering the Socios sports token fan ecosystem. On April 18-19, the team notify Burned a bunch of fan tokens. The company also announced that it will launch its own sports blockchain in May. However, CHZ plummeted nearly 10% on April 20-21, sparking investor concerns about downside risks.
Digging into on-chain data suggests that CHZ could be in for a lot of trouble in the coming days.
Holders CHZ Flood the Market
Considering the current market orders placed by CHZ holders on top exchanges, there seems to be an oversupply. Aggregated data provided by IntoTheBlock below shows that pessimistic traders sold 56 million CHZ, while only 45 million CHZ were bid.
Total CHZ on exchange order books April 2023 | Source: enter the block
When the supply of an asset exceeds demand, it usually puts downward pressure on the price. Therefore, the shortage of 11 million tokens provides a lot of room for buyers to bargain and drive down the price.
CHZ may struggle to find new demand
The number of new investors joining the Chiliz ecosystem has dropped significantly in recent weeks. Chiliz Network’s growth rate fell 60% between April 5 and April 20, according to data compiled by Santiment.
The red line in the graph below depicts the daily drop in the number of new CHZ wallet addresses from 319 to 126 on April 20.
Prices and network growth in April 2023 | Source: mood
Slowing network growth means the Chiliz ecosystem is losing traction. If this trend continues, CHZ may struggle to find new demand to push prices out of their current slump.
CHZ Price Prediction: Fall Below $0.08
With the bearish sentiment surrounding the Chiliz ecosystem, CHZ appears set to lose its current support at $0.12. Even so, IntoTheBlock’s global money in/out data shows that 9,000 addresses bought 745 million coins around that price point, possibly trying to head off the bears.
If the support fails to hold, the next level of resistance lies at $0.08. At this average price, a cluster of nearly 11,000 addresses holds 3.57 billion coins, or $462 million. This cluster represents a major resistance level around $0.08 and will face significant selling pressure to break down the price further.
GIOM Price Distribution April 2023 | Source: enter the block
However, if CHZ can break above the $0.13 area, the market could turn green. But as mentioned above, a sell-off in the cluster of 9,000 addresses that bought 745 million tokens here could stem the upward momentum.
If this level can be breached, Chiliz price will trade above $0.14 before hitting a more significant sell wall.
Furthermore, the data shows that only 12.58% of CHZ holders are profitable. According to the current price, the loss is as high as 79.25%.
GIOM Price Distribution April 2023 | Source: IntoTheBlock
Only 8.17% are still in the break-even zone.
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