Berachain (BERA) has witnessed an impressive 30% price surge in the last 24 hours, marking a significant recovery from its losses earlier in February. Investors have eagerly embraced this rally, hoping for sustained growth.
Nevertheless, market signals are hinting at potential challenges ahead for this altcoin’s upward trend.
The recent surge notwithstanding, the funding rate for BERA remains notably negative. This suggests that a majority of traders have opted for short contracts against the coin, signaling expectations for a forthcoming pullback that could be exploited for profit.
This prevailing negative sentiment indicates a sense of caution among investors, with many hedging against a possible reversal. This lack of confidence in the sustainability of BERA's price increase, coupled with the mounting short interest, could heighten downward pressure on the altcoin.
Taking a look at the technical side, BERA's macro momentum is displaying cautionary signals. The Relative Strength Index (RSI) has entered the overbought zone, surpassing the 70.0 threshold. Historically, such levels have foreshadowed price corrections, with traders cashing in profits as momentum slows down.
Should the RSI maintain its position in this zone, selling pressure might emerge, potentially sparking a price reversal. While bullish sentiment currently prevails, technical indicators suggest a possible downturn unless buying volume steps up to support further gains.
As of now, BERA is trading at $8.13, aiming to conquer the resistance at $8.72 while establishing $7.71 as a crucial support level. Staying above this level could bolster the bullish sentiment and open doors for additional growth.
Nonetheless, the prevailing market conditions imply a bearish outlook. With negative funding rates and an overbought RSI, BERA could face challenges in sustaining its upward trajectory. Failure to hold above $7.71 could result in a descent towards lower supports, with $7.07 serving as a significant level, and a further dip towards $6.24 is also on the cards if selling pressure mounts.
However, should the broader market sentiment remain bullish, BERA might defy expectations. If it successfully breaches the $8.72 resistance, a retest of its all-time high at $9.23 could be in the offing.
In this optimistic scenario, the bearish stance would be invalidated, and sustained buying momentum could propel BERA into a phase of price discovery.