More troubles ahead for KuCoin as KCS crashes 30% in just 24 hours

More troubles ahead for KuCoin as KCS crashes 30% in just 24 hours
Image by Walter Knerr from Pixabay

YEREVAN (CoinChapter.com) — KuCoin (KCS) prices crashed by almost 30% in the span of only 24 hours, putting an end to its five-day bull run that secured more than 100% profits for its traders.

The KCS/USDT exchange rate was reached $14.87 on Wednesday for the first time since May 5. Its new highs prompted traders to secure their profits. As bids for higher levels dropped, on the other hand, the pair started plunging lower, insofar that it reached a week-to-date low of $10.40 in Thursday’s early London session.

Nonetheless, KCS was showing signs of recovering following the New York opening bell. It rebounded to over $11.50 on accumulation sentiment, albeit staying in red on an intraday basis.

KuCoin turned lower after testing its historic resistance level of $15.6
KuCoin turned lower after testing its historical resistance level of $15.6. Source: KCSUSD on TradingView.com

Bulls caught bears off-guard near $9.50, a level that served as support between April 6 and May 18 but flipped to an equally strong resistance following the May 19 crash. KCS reclaimed it back as support during the July 6 pump, surging more than 50% into the session.

That leaves KCS with three potential outcomes: Either it can rebound higher and test $15.60 for a bullish breakout, or it can consolidate sideways inside the $15.60-9.50 trading range, or—which appears more likely—it could test $9.50 for a bearish breakdown.

Part of the reason why KCS looks skewed to the downside is its relative strength index (RSI) readings. In detail, traders watch the RSI readings to determine the relationship between an asset’s price trend and momentum. That results in readings between 0 to 100, with levels below 30 alerting about an asset’s oversold nature (a buy signal) and levels below 70 indicating an overbought asset (a sell signal).

Meanwhile, the 30-70 range represents a neutral area, with readings above 50 skewed to bears and below 50 skewed to bulls.

KuCoin’s daily RSI is 63.78 at press time, meaning bears have control over its market despite the latest minor rebound. Nevertheless, selling KCS could be a good strategy for traders who bought the token at the beginning of this week, especially if they would like to offset their risks against a falling cryptocurrency market on the whole.

The other reason why KuCoin risks downside correction is low liquidity. Data collected from Messari shows that KCS’s volume was just around $82,000 in the previous 24 hours. That is very low for a token that proud itself for being an exchange asset.

KuCoin volumes are strikingly lower than other exchange tokens. Source: Messari
KuCoin volumes are strikingly lower than other exchange tokens. Source: Messari

Thin volumes mean that there are fewer numbers of KCS tokens trading. Therefore, there is a lower KCS liquidity across the markets, which means its price volatility could rise abnormally.

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