OmiseGo has taken its holders on a wild ride that may soon come to an end.

Key Takeaways

  • OmiseGo surged over 200% in the past few weeks.
  • Despite the massive gains, most OMG holders are still in the red. 
  • Different indicators suggest that a correction is underway. 

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Despite the massive upswing that OmiseGo (OMG) enjoyed over the past few weeks, several indexes show bears on the horizon.

OmiseGo Shoots Up 

OmiseGo has stolen the spotlight in the cryptocurrency market after the impressive rally it experienced in the past two weeks. Ever since Coinbase Pro announced that it would be adding support for this ERC-20 token, its price skyrocketed over 200%. 

OMG went from trading at a low of $0.76 to reach a new yearly high of $2.27, in a matter of seven days. 

Many investors appear to have taken advantage of the recent price action to exit some of their long positions. Such selling pressure has, however, seen OmiseGo retrace over 30% since the peak of May 22. 

OMG/USD on TradingView

Although some market participants were able to enjoy the wave of the so-called “Coinbase Effect,” data reveals that most OMG holders will still be selling at a loss if they jumped ship today. 

Most Holders Are in the Red

IntoTheBlock’s “Global In/Out of The Money” identifies investors’ average purchase price of a cryptocurrency versus its current price. The model analyzes crypto addresses (wallets) that bought at an average price above or below the current market price.

Based on this statistical model, nearly 95% of all addresses holding OMG are currently “Out of the Money,” while only 3% are “In the Money.”

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IntoTheBlock Analysis of OMG
Global In/Out of the Money by IntoTheBlock

When considering the distribution of all tokens in circulation, it is interesting to see that 24% of them are “In the Money.” Still, over 55% of all OMG tokens were acquired at a price range higher than the current price levels.

Research on investor behavior shows that traders are reluctant to sell assets at a loss. Therefore, these figures indicate that the investor base behind OmiseGo may use every opportunity they have to sell some of their holdings to break even or turn a profit. 

IntoTheBlock Analysis of OMG (1)
Global In/Out of the Money by IntoTheBlock

From a technical perspective, it seems like OMG holders are far from being able to get out of their losing positions.

A Sell Signal Approaches 

The uptrend that OmiseGo entered at the beginning of March took the token up to recently test the resistance provided by the 100-week moving average. This barrier, however, has been able to hold, preventing the ERC-20 token from further advance. 

If the strength of this hurdle prevails over the next week, OMG is bound for a bearish impulse. 

Indeed, there is a high probability that the TD Sequential indicator will present a sell signal in the form of a red nine candlestick on Monday. The bearish formation estimates a one to four candlesticks correction before the continuation of the bullish trend.

A spike in the selling pressure behind OMG could push its price down towards the 50-week moving average. This support level is hovering around $1.

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OMG Price Analysis (1)
OMG/USD on TradingView

Nonetheless, moving past the 100-week moving average may signal that OMG still has some gas in the tank. 

If this were to happen, the next critical resistance level to watch out is represented by the setup trendline sitting around $2.6. 

High Expectations in the Crypto Market 

Some of the lower cap altcoins in the market have been posting significant gains over the past month. 

Theta, for instance, shot up more than 350% as speculation mounted around a partnership with Google. Meanwhile, Bitcoin, as well as Ethereum, XRP, and Litecoin, have been stagnant without any significant price action. 

For this reason, many crypto aficionados are preparing for what could be the beginning of a new alt season. But with such high expectations, the market may turn around to flush out some of the so-called “weak hands” before it enters a new bull cycle. 

Now more than ever, it is crucial to implement a robust risk management strategy, to avoid getting caught up on the wrong side of the trend. 

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