Anchor Protocol price analysis: is there any hope on the charts?

It is difficult to predict the recovery of the Anchor Protocol

Anchor Protocol screen shot                                 
The de-pegging of the UST with the US dollar started a downward spiral in Anchor – Photo: Alamy
                                

Anchor Protocol was the biggest decentralised application on the Terra platform, offering high yields on deposits of Terra’s stablecoin UST. The de-pegging of the UST with the US dollar started a downward spiral in Anchor. As of 17 May 2022, the buyers are attempting to arrest the sharp decline.

Eden Au, research director at The Block Research, said: “The ANC price crashed due to the loss of confidence in UST and the Terra ecosystem as a whole, as a result of the UST de-pegging,”  The Block reported.

Several investors withdrew funds from the Anchor Protocol, bringing the total value locked on the platform from more than $17bn on 6 May to $16m, a fall of more than 99.9%, according to the Defi Llama. This shows the kind of exodus by investors.

The crypto lending business Celsius, which had about half a billion dollars of deposits in Anchor Protocol, was one such firm that withdrew a large portion of its funds on 11 May, according to he blockchain data firm The Block Research and Hoptrail. 

The crypto investment firm Arrington Capital, with more than $1.6bn in assets under management, had announced a $100m Arrington Anchor Yield Fund in November of last year to provide a “stable yield” to investors. However, after the recent collapse of the Terra ecosystem, the fund has been removed from the website of Arrington, CoinDesk reported.

After the recent debacle, it is difficult to predict the recovery of the Anchor protocol. Investors of the token may have to take one day at a time and keep a watch on any fundamental developments that may indicate a revival. Could the Anchor protocol go up or is it time to call quits? Read the ANC price analysis to find out.

Anchor Protocol weekly chart
Anchor Protocol weekly chart – Credit: Capital.com

Anchor Protocol price technical analysis: weekly chart

ANC’s price had been trading in a large range between $4 and $1.70 for the past several months. Although bears pulled the price below $1.70 in January of this year, the bulls aggressively purchased the dip and pushed the price back into the range.

The ANC/USD pair thereafter rallied back toward the resistance of the range. Traders usually book profits near the resistance of the range and attempt to buy again near the support. The same thing happened with the pair which turned down from the resistance of the range.

However, unlike previous occasions, the bulls could not offer any support in the critical zone between $1.41 and $1.74. That may have resulted in panic selling as traders rushed to the exit. That has resulted in a waterfall decline, with the pair plunging to $0.13.

The buyers will now try to start a recovery which could reach the downtrend line where the bears may again pose a strong challenge. A break and close above the downtrend line will be the first indication of a potential change in trend.

Anchor Protocol daily chart
Anchor Protocol daily chart – Credit: Capital.com

Anchor Protocol price technical analysis: daily chart

ANC’s price plunged below the strong support zone at $1.74 to $1.41 and is attempting to form a bottom near $0.10. The sharp fall of the past few days has pulled the relative strength index (RSI) deep into the oversold territory. This suggests the possibility of a relief rally in the next few days.

On the upside, a  break and close above $0.33 could open the doors for a possible upward move to $0.60. This level may act as a stiff resistance as the price had turned down from it on 14 May. The bulls will have to overcome this barrier to push the price to the downtrend line.

On the downside, if the price slips below $0.10, the pair could retest the recent low at $0.07. A break and close below this support could suggest the resumption of the downtrend.

Anchor Protocol: buy or sell this week?

Anchor Protocol has been in a freefall for the past few days. Usually, after such sharp declines, the asset enters a bottoming formation and spends a large time inside a range. The levels to watch on the upside are $0.33 and then $0.60. On the downside, the Anchor Protocol’s price analysis suggests that a break and close below $0.07 could signal the resumption of the downtrend. That may further reduce the possibility of a long-term recovery.

The views and opinions expressed in the article are those of the author and do not constitute trading advice. Trading and investing involve substantial risks and you should do your own research or contact your financial adviser before arriving at a decision. 

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