Onyxcoin (XCN) has been on a downward spiral over the past month, shedding 42% of its value. This sharp decline has pushed it into undervalued territory, often seen as a buy signal for traders looking to capitalize on discounted prices.
However, despite its undervaluation, on-chain metrics suggest the downtrend may not be over.
Onyxcoin Flashes Buy Signal, But Risks Abound
BeInCrypto’s analysis of XCN’s market value to realized value (MVRV) ratio, based on a 7-day and 30-day moving average, confirms that the token is currently undervalued. Santiment’s data shows these metrics at -8.49% and -24.87%, respectively, at press time.
An asset’s MVRV ratio tracks whether it is overvalued or undervalued by measuring the relationship between its market value and its realized value. When this ratio is positive, its market value is higher than the realized value, suggesting it is overvalued.
On the other hand, as with XCN, when the ratio is negative, the asset’s market value is lower than its realized value. This suggests that the coin is undervalued compared to what traders and investors originally paid for it.
Historically, negative MVRV ratios like this are seen as buy signals. However, XCN’s steady decline over the past month has weakened bullish sentiment among holders, many of whom now bet on further losses.
This has created a feedback loop, prompting continued sell-offs and adding more downward pressure on the coin’s price. This is reflected in the coin’s persistent negative funding rate, which is at -0.022% at press time.
The funding rate is the periodic payment exchanged between long and short traders in perpetual futures markets. When the funding rate is negative, short traders pay long traders, indicating bearish sentiment as more traders bet on decreasing prices.
Moreover, XCN’s plummeting open interest confirms the weakening demand for the altcoin. As of this writing, the metric stands at $11 million, falling 14% in the past 24 hours alone.
An asset’s open interest measures the total number of its outstanding derivative contracts, such as futures or options, that have not been settled. When it falls, it suggests that traders are closing their positions, indicating weakening market interest and hinting at a potential price decline.
XCN Price Prediction: Rebound or Further Drop?
On a daily chart, the set up of XCN’s Relative Strength Index (RSI) highlights the falling demand for the altcoin. At press time, this is below the 50-neutral line and in a downward trend at 45.55.
An asset’s RSI measures its overbought and oversold market conditions. It ranges between 0 and 100, with values above 70 suggesting that the asset is overbought and due for a correction. On the other hand, values below 30 indicate that the asset is oversold and may witness a rebound.
XCN’s RSI is at 45.55 and falling, which indicates weakening bullish momentum as sellers strengthen their control. If this persists, the token’s price could plunge to $0.011.
Conversely, a resurgence in demand will invalidate this bearish outlook. In that case, XCN’s price could rally to its year-to-date high of $0.049.
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