Graph (GRT) Begins Downside Correction After Up 245% YTD – What’s Next?

Graph (GRT) prices fell on Feb. 8 amid a broader correction among the top crypto assets.

GRT Price Soars Alongside Other Data Governance Tokens

GRT was down nearly 14.5% on the day at $0.17, showing signs of exhausting momentum in a short-term uptrend after rising more than 200% at the start of the year. At an intraday high, the token changed hands at $0.23 on Feb. 7, marking a new nine-month high.

Daily price chart GRT/USD. Source: TradingView

Driven by a slowdown in Fed rate hikes and a strong recovery in the Bitcoin market, buyers flocked to the GRT market with relatively strong risk appetite, which usually affects trending altcoins.

The GRT bull run has been accompanied by similar growth for data management platform tokens. The industry doubles in market capitalization through 2023, with Ocean Protocol (OCEAN), Mask Network (MASK) and Band Protocol (BAND) gaining more than 200%, 100% and 60% respectively.

Tokens manage data and their properties.Source: Messari

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Will The Graph continue to adjust prices?

GRT’s impressive rally has left The Graph technically overbought, according to its daily frame Relative Strength Index (RSI) indicator.

Notably, the daily RSI has surpassed 70, a level considered by conventional analysts to be an “overbought” signal. This often results in anti-exhaustion followed by a major price consolidation or correction.

In either case, GRT’s overbought status could lead to a 30% drop in its price next month to $0.13, which is supported during the May-June 2022 consolidation period at the 200-day exponential moving average (green wave) around $0.11.

Daily price chart GRT/USD. Source: TradingView

However, fundamentally, GRT looks stronger due to its healthy network statistics.

For example, The Graph saw a 66% quarter-over-quarter increase in query fee revenue in Q4 2022 due to the migration of subgraphs from hosting services to the decentralized network (mainnet) during and after March 2022. ).

The Graph’s revenue for recent quarters.Source: Messari

The Graph ecosystem involves two main stakeholders: on-chain API (or subgraph) developers and data consumers. Data consumers pay subgraph developers a fee to fetch data from the blockchain, known as a query fee. The fee is paid in GRT.

Messari researcher Mihai Grigore noted in her quarterly report on the project:

“As more subgraphs move to mainnet in the coming quarters, query fees will continue to increase. This increase in volume may attract more important players to the protocol as it benefits the existing protocol.”

Therefore, the long-term trend for GRT may still favor the bulls. Additionally, independent altcoin analyst Sherpa predicted a strong rally after the coin tested the $0.13 support level.

“I’d just wait for consolidation or buy down. You’ll be looking for something like that at 0.13 in the lower bracket; some consolidation before going into the other leg.”

Daily price chart GRT/USD.Source: Altcoin Sherpa

  • GRT up to 80% before The Graph is unlocked and tokens are transferred to Coinbase
  • GRT up 55% this week as The Graph breaks $1B mark

board take

As reported by Cointelegraph

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