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Bonk (BONK) Lost 40% of Its Value in 3 Days: Can It Recover?

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Mon, 18/12/2023 - 1:00
Bonk (BONK) Lost 40% of Its Value in 3 Days: Can It Recover?
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Bonk (BONK) has become the latest example of FOMO and the heavily overbought cryptocurrency market. Over a span of just three days, BONK saw its value tumble by 40%, sparking intense discussions among investors and market spectators about its ability to recover.

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BONK's price performance has been nothing short of a roller-coaster ride. Following an exhilarating rally, the token experienced a sharp correction, reminiscent of the price patterns seen in other meme-inspired cryptocurrencies like Shiba Inu.

SHIBUSDT
SHIB/USDT chart by TradingView

Both BONK and Shiba Inu possess not only similar themes, rooted in a culture of whimsy and community-driven hype, but also comparable traits in their market behavior. Typically, such tokens witness a surge in value driven by social media push and community excitement, only to face significant sell-offs as the initial enthusiasm wanes.

The recent rally in BONK's price can be largely attributed to the success of Solana, with which it shares a symbiotic relationship. Rather than standing on its own achievements, BONK's surge appears to be riding the coattails of Solana's ecosystem, benefiting from the network's increasing adoption and success. This link suggests that BONK's fortunes may be closely tied to the performance and sentiment surrounding Solana, rather than its own fundamentals.

Despite the severe drop, there is an absence of heavy selling by whales (large holders of the token), indicating that the current volatility is primarily driven by retail investors. These smaller investors, who make up the majority of holders, are more susceptible to market sentiment and are often quicker to react to price movements, exacerbating the token's price fluctuations.

The community's aspirations for BONK are ambitious, with some members setting their sights on a market capitalization of $10 billion. Achieving such a valuation would require a monumental influx of capital and an expansion in utility or adoption that goes beyond the current state of play.

Solana aims at next support level

Solana (SOL) has been under the watchful eyes of investors, as market indicators suggest a possible downturn in its price. Based on the current price analysis, SOL is facing a potential 7% loss. However, this anticipated dip comes with a silver lining that could spell a positive outcome for the asset in the long term.

Examining Solana's price chart, we notice that it has been enjoying a bullish trend with prices ascending along a steep curve. Recently, though, the asset has encountered resistance, indicating that a short-term pullback could be on the horizon. This resistance level has proven to be a tough ceiling to break, leading to the possibility of a near-term retracement in value.

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The catch lies in the underlying support levels. If Solana were to fall by the projected 7%, it would land squarely on a robust trendline support that has historically served as a springboard for price rebounds. This trendline, acting as support, has been tested multiple times, confirming its validity and strength.

Essentially, while a drop in price is often viewed negatively, in this scenario, it could serve as a healthy market correction. Such a correction is necessary to maintain the overall upward momentum by allowing the market to consolidate gains and gather strength for a potential bounce back.

For Solana, hitting this support level could attract buying interest, as market participants recognize the potential for a rebound. In this sense, the anticipated drop could be the correction Solana needs to reset and launch off from a position of strength.

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