The Injective (INJ) cryptocurrency has been experiencing a continuous downward movement in its price, despite recent attempts by the network to enforce deflationary measures like token burning, where 10,000 INJ tokens were permanently removed from circulation. This action, typically taken to reduce supply and increase the scarcity of the tokens, has yet to show a positive impact on the market value of INJ, which is still facing bearish trends amidst general market downturns.
Effectiveness of Token Burn on Market Price
Although reducing the total supply of tokens is expected to lead to increased demand and higher prices, the results for INJ are slow to materialize. The price of Injective remains low, hovering around $26, despite the reduced number of tokens available. This suggests that other market factors may be overpowering the potential benefits of token scarcity.
Market Indicators and Future Predictions
Technical indicators like the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) are still pointing towards a bearish outlook for INJ. The RSI remains below the midline, and the MACD continues in a negative zone, indicating that the downtrend may persist. However, there’s a potential reversal if the price of INJ can break through critical resistance levels, particularly at $31.18, and sustain an upward momentum.
Key Resistance Levels to Watch
For a bullish reversal, INJ would need to surpass the Smooth Moving Averages (SMA) at $31.80 and $33.08. Achieving and maintaining price levels above these resistances could attract further buying activity and potentially lead to a price increase, as indicated by trading volume analysis.
Points to Consider
- Burning of tokens might take longer to reflect in price due to prevailing negative market sentiments.
- Bulls need to push the price above $31.18 and $35.23 to negate the bearish outlook.
- Monitoring volume at resistance levels can provide clues about the potential for price recovery.
Ultimately, while token burning has introduced a deflationary aspect to INJ, its effectiveness in combating broader market trends is still in question. Investors should closely monitor resistance levels and volume indicators to gauge the potential for an upward trend reversal in the Injective market.