End of bull run? The Graph awaits correction after a 200% GRT price rally

The price of Graph (GRT) declined on February 8 along with a wider correction in major crypto assets.

GRT price is skyrocketing along with other data governance tokens

The price of GRT fell almost 14.5% on the day to $0.18, showing signs of short-term exhaustion of upside potential after gaining more than 200% at the start of the year. At the peak of the session on February 7, the token was changing hands for $0.23, the highest level in nine months.

GRT/USD daily chart. Source: Trading View

Buying has flocked to the GRT market amid relatively stronger risk sentiment driven by slower US Federal Reserve interest rate hikes and the strong recovery seen in the bitcoin (BTC) market, which usually affects altcoins.

The rise in GRT prices was also accompanied by a similar rise in data management platform tokens. The market capitalization of this sector doubled in 2023, with Ocean Protocol (OCEAN), Mask Network (MASK) and Band Protocol (BAND) recording growth of over 200%, 100% and 60% respectively.

Data management tokens and their characteristics. Source: Messari

Will The Graph price correction continue?

According to the daily Relative Strength Indicator (RSI), the impressive GRT price rally has left The Graph technically overbought.

Notably, the daily RSI has risen above 70, which conventional analysts see as an “overbought” signal. Typically, this leads to the exhaustion of upside potential, followed by consolidation or a significant price correction.

Either way, GRT’s overbought status risks falling 30% next month to $0.13, support since the May-June 2022 consolidation session. The line also appears near the GRT/USD 200-day exponential moving average (200-day EMA; wave blue) near $0.11.

GRT/USD daily chart. Source: Trading View

However, from a fundamental point of view, GRT looks stronger thanks to good network performance.

For example, The Graph recorded a 66 percent increase in query fee revenue in Q4 2022 QoQ due to the transfer of subgraphs from the hosted service to the decentralized network (mainnet) in March 2022 and beyond.

The Graph’s revenue for recent quarters. Source: Messari

There are two key players in the Graph ecosystem: developers of network APIs (or subgraphs) and data consumers. Data consumers pay subgraph developers a fee to get data from blockchains, called a request fee. This fee is payable in GRT.

“The cost of queries should continue to rise as more subgraphs are moved to the mainnet in the coming quarters,” Mihai Grigore, researcher at Messari, noted in his report. quarterly report in the project by adding:

“This increase in volume could bring more key players to the protocol as it boosts the profitability of existing ones.”

Blockchain Indexer The Graph Says 2 Years After Mainnet Launch, Adoption Is Still Strong

As a result, the long-term GRT bias may remain bullish. Moreover, independent analyst Altcoin Sherpa anticipates strong bounce after The Graph token tested $0.13 as support.

GRT/USD daily chart. Source: Altcoin Sherpa

“I will just wait for consolidation or dip and buy,” he wrote, adding:

“You’ll be looking for stuff like this at 0.13 on lower TFs; some consolidation before another stage. Considering how badly this rect got, I think there’s more left in the tank. Insane amount.”

This article does not contain investment advice or recommendations. Every investment and trading step involves risk, and readers should do their own research when making a decision.

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