As the market declined, SPX6900 [$SPX] saw extreme downside volatility. The memecoin lost the $0.50 support and dropped to a low of $0.46. In doing so, $SPX printed a double-digit slip, falling 10% on the daily charts as of writing, while its trading volume climbed 123%.
Rising volume during a price drip suggested increased sell-side activity as investors reduced exposure. Thus, the memecoin mostly declined as the market sentiment flipped. Notably, within a week, the Fear and Greed Index flipped from greed to fear.
At 26, the index indicates that the market sentiment is bearish and investors are taking a step back or exiting entirely. When such sentiment overruns the market, the market weakens, leading to more losses.
SPX6900 investors reduce exposure amid sentiment shift
Amid a broader market slip, SPX6900 saw increased sell-side activity. On the derivatives side, for example, Open Interest (OI) surged 12.6% to $44.2 million as of writing.
At the same time, the derivatives volume surged 82% to $45.7 million. When OI declines amid rising volume, it suggests that more positions were closed. This suggests that leveraged positions were flushed out.
Often, reduced leverage reduces volatility and leads to a short-term price drop. Moreover, the spot market also saw renewed bearish pressure, as sellers have not dominated the spot side since late August.
However, on the 10th of September, Spot Netflow rose to $117k, marking a massive reversal from -$1.2 million the previous day. A positive netflow suggests that more outflows were recorded on exchanges.
Historically, intense selling pressure from both spot and derivatives has often resulted in more losses on the price charts.
Can $SPX still absorb the pressure?
With market participants’ sentiment flipping bearish, and sellers dominating the market, SPX6900 downside momentum has strengthened. A look at the momentum indicators confirms this view.
For starters, the memecoin’s MACD has been on a decline since making a bearish cross days ago, falling to 0.03 at press time. A falling MACD suggests that momentum is weakening as selling pressure dominates.
Moreover, the Relative Strength Index (RSI) also went on a decline, and continued to hold below 50 at 48 at press time. Under these market conditions, SPX6900 is likely to see extended weakness. If it persists, $SPX will likely revisit $0.41 support.
However, if the slip brings new dip buyers, the memecoin will reclaim $0.5 and target a move above $0.54.
Final Summary
- SPX6900 dropped 10%, breaching the $0.50 level and falling to a local low of $0.46.
- SPX6900 declined as market sentiment flipped negative, triggering a wave of exits across the market.