Should you buy the Sandbox (SAND) cryptocurrency after its 290% surge on Novem…
NOIDA (CoinChapter.com)—SANDBOX (SAND) crypto token has had quite a bit going on for a month so far, with the token rising over 290% at one point. These large price movements tend to increase the hype surrounding a property, drawing more buyers into the market.
However, large price spikes that are not supported by any real bullish signals can be a bull trap for traders.
Bull may be running low on fuel
SAND’s recent 250% surge is largely driven by speculative activity and bullish market sentiment rather than updates in the sandbox ecosystem. On-chain data shows that open interest has risen sharply to over $250 million, signaling an increase in speculative trading.
The funding ratio also reversed positively during this rally, indicating that traders were willing to pay a premium to hold long positions, which pushed the price higher. But the lack of a concrete catalyst to support the rally could raise concerns about its sustainability.
As the rally cooled, open interest in SAND futures began to decline, resulting in a loss of more than $23 million in just 24 hours.
Metaverse tokens like SAND have benefited from renewed interest in virtual assets, but the rally has also been heavily influenced by the broader cryptocurrency market surge, particularly cyclical profits from traders seeking to profit from Bitcoin’s rally above $98,000. It appears to be.
Moreover, current market dynamics suggest that profit booking has already begun. SAND bulls may find it difficult to maintain the token’s momentum without substantial developments such as new partnerships, ecosystem upgrades, or major institutional support.
Speculative rallies triggered by a surge in open interest often face sharp corrections when traders liquidate their positions en masse, leading to sharp price declines.
A renewed interest in the NFT sector could benefit sandbox tokens, but it may not be enough to warrant bullish SAND price action.
Falling SAND Prices Drive Profit Booking
Meanwhile, the SAND USD pair fell victim to profit booking, with the rally falling more than 23% from a high of $0.867 on November 25 to a low near $0.663 on November 26. With nothing to sustain the rally, the sandbox cryptocurrency fell victim to the Bears’ profit booking.
SAND price saw a massive 80% rally on November 24th, likely putting traders who bought the token in the green in November as well. Accordingly, market participants began to aggressively bet on profits.
Moreover, the SAND token failed to reach its expected price target due to a falling wedge (better visible on the HTF chart) pattern breakout. Rejection near the 0.5 FIB level tilted the token towards the 0.382 FIB support near $0.645.
A violation of the immediate support level could lead to the Sandbox token testing support near $0.48.
Conversely, if SAND were to start a rally again, it would need to overturn the 0.5 FIB level near $0.7 and then move towards resistance near $0.91 with sufficient volume to establish an authoritative bullish narrative.
Conquering the resistance at the 0.618 FIB level could help SAND price create an important psychological level by targeting resistance near $1, the price mark the token last touched in August 2022.
SAND’s RSI remains overbought with a score close to 74.42.