Internet Computer's ICP rallies by 30% into overbought territory, …

Internet Computer's ICP shoots up by 29% into overbought territory, crash ahead? — “LOS ANGELES UNION STATION 1948” by ATOMIC Hot Links is marked with CC PDM 1.0

Internet Computer’s ICP registered 30% gains in a near-vertical rally
Fundamental developments and market-wide run-up are probable reasons behind the pump
RSI readings ringing the overbought alarm

JAIPUR (Coinchapter.com) – Internet Computer, the newest smart contract blockchain, saw its native blockchain asset shoot up by 30% in the last 24 hours. The ICP/USD exchange rate lifted off from the low at $40.24 on Friday and went straight to $57.

Internet Computer’s underlying cryptocurrency climbed back into the $50.5-59.5 price range with the said move. The same has acted as an area of crucial resistance since June 17. Explosive buying pressure catapulted the ICP/USD exchange well above the 50-day, 200-day simple moving average (MA) waves. And the 20-day exponential moving average (EMA) indicator as well.

Bulls still have a strong grip on ICP’s momentum, and profit-taking traders have not entered the scenario yet.

Fundamental Developments

Internet Computer has been scoring quite some brownie points on the adoption front. As per the latest update on the Internet Computer network growth, the blockchain successfully generated more than 120 million blocks to date.

📈This week, the #InternetComputer surpassed +120M blocks generated. Block count has grown by an average of 45% week over week since Genesis.📈

The block count metric speaks to both the speed and capacity of the Internet Computer.

Find more live stats: https://t.co/e4FaOV7tnq pic.twitter.com/Nauvx3Z2jt
— DFINITY Foundation (@dfinity) August 6, 2021

According to the official network status data, the smart contract blockchain’s overall size amounts to almost 63 GB, with blocks being compiled at the rate of 20 blocks/sec. Investors assessed Internet Computer’s above milestone and opened long positions on the ICP/USD exchange rate en-masse. However, that’s not all.

Developer count on the “new-age” distributed computing platform also experienced an uptick. “1,400 developers are now coding on the Internet Computer through the Cycles Faucet in partnership with Fleek HQ – a 40% increase from last week,” reads the latest tweet from parent governing body, Dfinity Foundation.

But while the sun is shining bright on ICP, selloff dangers loom large.

Internet Computer’s ICP Overbought

No signs of backing off from bulls have led the ICP/USD spot pair into the overbought arena. Relative strength index (RSI) readings have exceeded way past the normal RSI range (30-70) and are now trending at 77. Numbers below 50 favor bulls, and the ones above 50 favor bears. Going by this analogy, the current situation indicates that a drawdown is nigh.

This is evident from the previous scenarios when sky-high RSI numbers led to significant selloffs and major trimming of gains. In the cryptocurrency’s relatively short history, RSI rang the ‘overbought bell’ on three occasions – when ICP prices hit $60 on June 29, when ICP/USD rose to $46 from the bearish phase that followed the June 29 high, and during the current rally.

Internet Computer's ICP risks dropping to $41 — Internet Computer’s ICP risks dropping to $41. Source: ICPUSD on TradingView

Selloffs and stagnation phases immediately followed run-ups on the previous two occasions. With the current scenario, the same seems imminent yet again.

And in case a selloff does happen, the ICP/USD risks dropping down to $41.74, which coincides with the 78.6% Fibonacci retracement plot level and the 50-day MA in the worst-case scenario. Bearish steam may run out after a drop to $47 or $45 price points in the normal scenario.