ApeCoin (APE) has seen a strong recovery after falling to its lowest level in two months. But their strong correlation with Bitcoin (BTC) and US equities amid macroeconomic risks suggests more losses could be in store.
APE rebounds after losses of 80% in two weeks
APE rallied nearly 45% to $7.30 on May 12. The pullback move to the upside came after APE fell around 81% to $5 on May 11, from its all-time high near $27.50 set on April 28.
The see-saw price action mirrored similar volatile moves elsewhere in the crypto market, led by the chaos around TerraUSD (UST), an “algorithmic stablecoin” whose value plunged to 23 cents earlier this week, and the aggressive response of the Federal Reserve to rising inflation.
APE/USD against USTUSD. Source: TradingView
Meanwhile, the correlation coefficient between ApeCoin and Bitcoin is now around 0.90, suggesting that it trades almost in tandem with BTC, which is testing multi-year lows.
Daily correlation of ApeCoin and Bitcoin. Source: TradingView
Dead Cat Bounce?
ApeCoin’s bounce occurred near what appears to be a strong technical support level.
Related: ApeCoin is down 70% or more since Otherside launched. Can Yuga Labs turn the ship around?
Notably, APE remains above $5.82 which coincides with the 0.786 Fibonacci line of the Fibonacci retracement chart sketched from the $0.97 low to $23.65 high. Meanwhile, the token’s daily Relative Strength Index reading is just above its “oversold” threshold level of 30, a buy signal.
APE/USD daily price chart. Source: TradingView
Therefore, a bounce move from the $5.82 support could see APE test $9.63 (the 0.618 Fibonacci line) as its short-term upside target.
Conversely, a prolonged break below support would risk the APE/USD pair crashing into unknown price territory, confirming that its pullback move was a mere dead cat bounce.
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This post dead cat bounce or bottom?
was published first on https://cointelegraph.com/news/apecoin-rebounds-after-ape-price-crashes-80-in-two-weeks-dead-cat-bounce-or-bottom