Key Takeaways
COW surged more than 23% in 24 hours as volume followed suit. Still, more than 70% of traders were profitable, but is that enough to sustain the rally?
CoW Protocol [COW] has been in an uptrend for the past month. As of press time, COW had surged by 23% in the last 24 hours, while its volume reached $150 Million.
More data from CoinMarketCap showed that COW’s DEX volume had surpassed that of 1inch [1INCH]. Combining this, price action and liquidity provided some insights on why the altcoin was up.
Will COW defend its gains?
COW’s surge took its price to a key level at $0.46 as the price broke from a bearish structure.
The shift in structure was corroborated by the trendline break, where price retested at $0.27. A second retest came to the same level, leading to a double bottom, which signaled the end of this correction.
With the level at $0.46 defining being defined by equal highs, a break above it could lead COW toward $0.88 thus opening the door to reclaim $1.
This surge was further backed by the rise in on-balance volume (OBV) despite the metric staying in the negative zone. Importantly, the OBV had surged from a low of -$738M to -$91M at the time of writing.
Source: TradingView
With the structure point toward a bullish continuation, it is worth assessing the other side of the coin. COW could revisit $0.27 if the equal highs produced a subsequent price decline.
This would make the structure still remain bullish. However, a break below $0.27 could invalidate the bias. Apart the structure influence, what else has determined and could define the future of COW?
Will profits lure more holdings?
More analysis using IntoTheBlock data showed that a huge number of holders were in the money. Statistics showed that about 71% were in profit while 29% faced losses, with the remaining being at break-even.
Since more traders were in profits, it could lure these participants into more holding time to increase the gains.
Examining the profitability data offered insights on key areas to focus on. Key resistance zones were between $0.46-$0.73 and $0.73-$1.55 where 55.77M and 230.62M respectively were accumulated.
On the hand, support important support zones were between $0.30 and $0.38 as more than 234M COW were bought.
The accumulation account was key, as holders tend to take profit or cut losses when price trades in these zones.
Can liquidity derail this surge?
Despite the anticipation of more gains, liquidity could play a key role in negating this sentiment. According to CoinGlass data, longs of 50X leveraged were reducing as price approached $0.45.
Meanwhile, shorts of equal magnitude but with more volume were building at this level. This signaled that derivative traders were starting to short the altcoin heavily, which could pose a problem.
Source: CoinGlass
Worth noting, Binance and Bybit controlled much of the token’s trading. Bybit had the most volume, with cumulative short liquidation leverage for both standing, at $2.90 million during press time.
