YEREVAN (CoinChapter.com) – Kusama, the “canary network” for the Polkadot blockchain, saw its in-house token KSM gain 14.5% of value in the previous 24 hours. As a result, the digital asset traded at nearly $80 in Tuesday’s European session.
KSM bear flag suggests a 35% decline
However, the charts hinted at an upcoming reversal for KSM, as the token formed a bearish flag, best visible in the four-hour time frame.
The setup consists of a flagpole and a flag. The former is the down-trending slope preceding the temporary upside consolidation. When the price action rebounds higher, the flag starts to form, and the sellers take a break.
As a rule of technical analysis, a bear flag resolves after the price breaks below its lower trendline and falls by as much as the flagpole size. That puts KSM on the path to $50, down about 35% from today’s price.
Additionally, Kusama’s locked tokens were released after the one-year lease.
Kusama’s Crowdloan token unlock could hinder the rally
As mentioned, Kusama is Polkadot’s canary Network, on which projects can test their applications. The Network launched its first parachain auctions in June 2021, and KSM holders could lend their coins to support promising projects.
Projects that attracted the largest KSM contributions gained access to one of the Kusama network’s parachain slots for one year. Thus, holders who contributed would receive their KSM tokens back at the end of the one-year lease.
In June 2021 Karura project won the first parachain slot. Moonriver, Shiden, Khala, and Bitfrost Finance joined in shortly after.
Nearly a year later, the 1.1million KSM tokens contributed to the first five auctions have been unlocked and returned to participants. Thus, the newly released coins could skew the supply-demand balance and dampen the rally. The upcoming sessions will show if the selloff fears had merit.