NEW DELHI (CoinChapter.com) — dYdX (DYDX) price is struggling to recover from the Jan. 3 flash crash that Bitcoin (BTC) ETF rejection rumors caused. Furthermore, the token could suffer more bearish headwinds if a technical pattern pans out.
The DEX’s native token has formed a bearish technical pattern called the ‘Descending Triangle.’
The descending triangle is a bearish continuation setup with a falling resistance line that caps upside attempts and a flat support that prevents declines. The height of the triangle’s thickest section determines the price target in a descending triangle setup.
Bulls are defending the pattern’s horizontal trendline support, breaching, which would confirm the pattern. If the triangle pattern pans out, DYDX price could face a drop of over 45% to reach the projected price target near $1.36, theoretically.
Investors relying on technicals would likely stay away from the Stellar crypto token. On the other hand, if bulls manage to break above the descending trendline resistance, buyers might flock to the market, further boosting XLM’s prices.
DYDX Price Faces Bearish Cues From Technical Errors And Attacks
The decline in DYDX price coincided with a broader market crash. Bitcoin price reacted to speculations of the US Securities and Exchange Commission’s (SEC) rejecting exchange-traded funds (ETFs) proposals.
The resulting FUD created a system deleveraging event within the dYdX ecosystem, affecting the SUI/USD market.
The market crash created a price movement large enough to force the dYdX system to execute a system deleveraging process for profitable traders. The process is a typical response to large-scale liquidations when the order book lacks sufficient liquidity to close all affected accounts.
As DYDX price plummeted by 30%, bottoming out at $2.230, the system closed the profitable accounts against the liquidated accounts. The deleveraging occurred when SUI price stood at $0.69325.
At the same time, the Yearn Finance (YFI) ecosystem suffered an attack from a malicious user who opened 5x leverage long positions in YFI/USD across more than 100 wallets.
As a result, Yearn Finance’s price rose by over 200%, allowing the attacker to increase their YFI/USD positions further, reaching approximately $50 million at the peak. In response, dYdX implemented various measures, including updates to its risk controls, to prevent similar incidents in the future.
The DEX stated that it had identified the malicious actor and informed the concerned authorities. However, the incident likely acted as a bearish cue for DYDX prices.
Furthermore, dYdX founder Antonio Juliano expressed his skepticism regarding the crypto market’s bullish temperament since Jan. 1. Juliano asserted that a true bull cycle involved active participation and community enthusiasm instead of just price action.
DYDX Bulls Fail To Stem Tide
Despite the bearish cues, DYDX bulls helped the token end Jan. 8 positively, helping the token close trading with 5.44% gains. However, bears stopped the rally in its tracks as DYDX price dropped 6.1% to a daily low near $2.47 on Jan. 9.
For DYDX to restart a rally, the token would need to break above the 100-day EMA (blue wave) resistance near $2.8. Conquering the immediate resistance could instill confidence in the rally, helping DYDX price reach $3.1 before retreating.
On the other hand, dYdX’s bearish cues could force the token’s price to the support level near $2.347. Failure of the immediate support level might see DYDX price dropping to the support near $2.06.
The RSI for DYDX remained neutral, with a reading of 37.55 on the daily charts.
