Fantom: The “But” in FTM’s Recent Rally and Why Traders Should Be Cautious

  • Fantom has a new proposal reduce the current burn rate
  • FTM’s price has risen by 30% in the last week

Phantoms [FTM] witnessed a 30% increase in the last seven days following the publication of the proposal to reduce the network’s current burn rate.

Read Phantoms [FTM] Price prediction 2023-24

Per data from CoinMarketCap, FTM was trading at $0.2449 at press time. A week ago, the altcoin changed hands at $0.19. The 30% price increase put FTM above other assets such as GMX, APE, CELO and UNI, which rose by 27.12%, 22.23%, 15.18% and 14.64% respectively.

Source: CoinMarketCap

Through its new governance proposal, titled the “dApp Gas Monetization Program,” Fantom sought to reduce its current burn rate. It planned to do so by redirecting the fee directly to the decentralized applications (dApps) residing on the network.

According to the proposal, if passed, “the implementation will reduce Fantom’s 20% burn rate to 5% and redirect this 15% reduction towards gas monetization.”

Furthermore, the gas monetization will “reward high-quality dApps, retain talented creators, and support Fantom’s network infrastructure.”

What Fantom has in store

At its current price, FTM was trading at the May price level. On an annual basis. FTM lost 91% of its value. As the cryptocurrency market tried to regain stability after FTX’s sudden collapse, FTM’s price took an upward trend since November 19. As observed on a daily chart, the FTM accumulation has since risen significantly.

Over the past two weeks, FTM went from being heavily oversold to being overbought at press time. As of November 19, FTM’s Money Flow Index (MFI) stood at 6.71, indicating massive selling. However, as the bulls re-entered the market and began to rally, the MFI continued an uptrend and marked its spot at 76.37 at press time.

Similarly, the Relative Strength Index (RSI) also rose from a low of 38 on November 19 to rest above the 50 neutral point at 66.45 at press time. This showed that FTM accumulation has increased in recent weeks, hence the rise in price, per data from CoinMarketCap.

Furthermore, buyers were in control of the market at press time. FTM’s Directional Movement Index (DMI) showed that the buyers’ strength (green) at 30.75 was solidly above the buyers’ (red) at 11.99.

The average directional index (yellow) at 26:12 showed that buyers’ strength was solid which sellers could find impossible to revoke in the short term.

However, it is important to note that overbought peaks are not sustainable. Also, with the severe volatility in the current market, most markets capitalize on a price rally to make money. Therefore, selling can begin as soon as investors start taking profits.

Source: TradingView

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