FTX Crashed Serum — Now a Bear Pennant Could Punch SRM Worse

NEW DELHI (CoinChapter.com) — Serum’s native token SRM faces increased selling pressure as it reels from the shockwave of the FTX collapse.

Serum, the brainchild of FTX founder Sam Bankman-Fried, is one of Solana network’s largest DeFi tools. However, several protocols across the Solana ecosystem began distancing themselves from Serum due to a lack of clarity on who controls the protocol.

Moreover, the hack at FTX chipped away at whatever little confidence investors had left in Serum. Incidentally, FTX holds the program authority keys for Serum.

Lending protocol Solend, Jupiter, AMM Raydium, and Mercurial Finance, along with centralized entities like Phantom wallet, limited their exposure to Serum by Nov 12.

Apart from market contributors shunning any contact with Serum, the protocol’s native token also formed a bearish technical pattern called the bear pennant.

In detail, pennants are continuation patterns. They form when a period of consolidation with converging trendlines follows a large movement in cryptocurrency prices. Then, the asset breaks out in the same direction as the large initial movement.

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Thus, to confirm the pattern, SRM volumes need to move up. Otherwise, the crypto token would continue to consolidate below $0.29. For a bear pennant, traders calculate the price target by applying the initial flagpole’s height to the point where the price breaks out from the pennant.

Hence, the SRM price might fall to $0.037, a massive 84% drop from current levels.

Bearish Pressure Strong Against SRM

The Serum token had dropped 58% on Nov 13 before nearly doubling in value between Nov 14 and Nov 15. However, long upper wicks on the daily candles underscore the presence of bears, who seem to be selling on every relief rally.

SRM price had a rather volatile day on Nov 21, with the token swinging 28% between intraday low ($0.25) and high ($0.32) levels. The bears pushed down to $0.25 before bulls joined the fight, helping SRM price recover some ground.

If bulls continue buying, the Serum token price would likely target resistance near $0.3. Moreover, needling and consolidating above immediate resistance would help SRM price reach resistance near $0.35 before downside corrections pare gains.

Meanwhile, the relative strength index for the Serum token remains neutral, with its reading of 36.13 on the daily RSI remaining quite close to the oversold threshold, which traders often consider a buy signal for an asset.

Conversely, a sell-off might result in the SRM price falling to test immediate support near $0.245. Moreover, breaking below immediate support could see the Serum token dropping to $0.197 before recovering.