LOOM Token Price Drops Nearly 70% From Multi-Year Highs — How to Trade It Next?

Key Takeaways:

• Loom Network token prices crashed after a nearly six-week-long rally.
• LOOM price likely fell prey to profit booking.
• South Korean traders are likely responsible for the pump and dump.

NEW DELHI (CoinChapter.com) — Loom Network’s native token rallied 1,220% for six weeks in a row. However, the upside sentiment started fizzling on Oct. 15, with LOOM peaking at $0.502, a multi-year high, and correcting by 67% four days afterward.

As of Oct. 18, the token was changing hands for $0.162.

LOOM Token Price Prediction 2023

A continued selloff would likely prompt LOOM token bulls to defend the 50-day exponential moving average (50-day EMA; the purple wave) near $0.141 as support. However, a breakdown below the wave could force LOOM’s price toward its 100-day EMA (the blue wave) near $0.107.

As a result, traders could open a short position toward $0.107 on a clear breakdown move, albeit by maintaining a stop loss above the entry level.

Conversely, LOOM’s bull can retake control if they can push the price above the 20-day EMA (the red wave) near $0.20. Moreover, breaking and consolidating above the immediate resistance might help the LOOM price target the resistance near $0.25.

In other words, traders can wait for a decisive rebound from the 50-day EMA to open a long position toward the $0.20-0.25 area.

LOOM Derivatives Data Shows Negative Funding Rates

Meanwhile, despite the token’s rally, LOOM’s open-interest-weighted funding rate has remained negative since Oct. 5. A negative funding rate means short position holders pay longs to keep their entries open, indicating their bearish bias.

Since Oct. 11, the LOOM derivatives market has liquidated $11.40 million of short positions. In contrast, the market’s long liquidations came to be around $5.70 million. In other words, bearish LOOM traders have incurred more losses than bullish traders due to the token’s persistent gains.

Still, many analysts had advised traders to short the Loom Network token before the coin crashed on Oct. 15. A crypto trader and analyst with the username blockchainmaneofficial told his 11,300 followers to “short the sh*t out of” the token on Oct. 13, predicting a reversal.

Various other X accounts shared screenshots of traders making profits from shorting LOOM, suggesting bearish market sentiment for the token has started growing.

South Korean Traders Pumped LOOM?

Crypto trader and founder of Altrbri, Marius Ekwebelem, shared in an X post that South Korean traders might be responsible for LOOM’s bull run.

Ekwebelem noted that LOOM tokens had the lion’s share of South Korean exchange Upbit’s wallet, suggesting that the exchange might have been involved in the token’s price pump. At the time, Upbit had over $164 million in LOOM coin in its portfolio.

The crypto trader noted that Upbit habitually “pumping dead projects.“

It might be likely that South Korean traders used the exchange to pump the token’s price before dumping.