The cryptocurrency market experienced a sharp drop after the U.S. Securities and Exchange Commission released a report on the possible rejection of a spot Bitcoin exchange-traded fund (ETF), and the price of altcoin dYdX (DYDX) faced a double setback. At the same time, dYdX suffered a systemic deleveraging event triggered by large price fluctuations in the SUI-USD market on the dYdX V4 exchange.
Systemic deleveraging: Uncovering the impact
A systemic deleveraging event occurred when the altcoin DYDX price fell 30% to a low of $2.230. The dramatic market crash caused a liquidity shortage, forcing the system to liquidate and pushing the system to find profitable accounts to offset the losses of the liquidated accounts. This complex situation occurred when the SUI price was $0.69325.
The turmoil spread to the Yearn Finance (YFI) ecosystem, where the attacker held a large long position, causing a sharp 30% drop in the price of YFI. Liquidity challenges prevented the attacker from closing their positions, resulting in significant losses on their remaining assets.
Post-crash measures and overall outlook
In response to this incident, dYdX took steps to prevent a recurrence, including updating risk controls. As the network recovers from the systemic deleveraging event, various factors will affect the outlook for DYDX prices.
Driven by buying pressure and supported by the 200-day and 100-day simple moving averages (SMAs) at $2.350 and $2.687 levels respectively, the altcoin DYDX price is gearing up for a recovery rally. The relative strength index (RSI) and average directional index (ADX) indicators highlight the upward momentum and the strength of the bullish trend, contributing to the bullish thesis.
Potential Price Targets: Upside Scenario
In the bullish scenario, increasing buying pressure could push the altcoin DYDX price above the $2.752 resistance level, indicating a 15% upside target of the 50-day moving average at $3.119. Further gains could lead to a recovery of the $3.410 level seen in late December, while an ambitious breakout could hit the supply zone between $3.729 and $3.998.
On the downside, profit-taking action could lead to a pullback and the price could test the 200-day support at $2.35. A breakout and close below this level will challenge the bullish thesis and could push the altcoin DYDX price below the recent lows of $2.23.
Strategic insights for investors
As investors navigate the post-crash landscape, it becomes increasingly important to stay attuned to technical indicators, support levels, and potential resistance areas. Monitoring the RSI, ADX, and key moving averages can provide insight into current market sentiment and potential price trajectory.
In summary, the post-crash journey of altcoin dYdX reveals both challenges and opportunities. When combined with the potential for a recovery rally, strategic price targets, and downside assessments, it provides a comprehensive perspective for investors aiming to make informed decisions in the dynamic cryptocurrency markets. #dydx
