The UMA Protocol continued to lose portions of its market capitalization on Friday as its native token of the same name plunged further.
THE UMA/USDT exchange rate was trading at $12.81 as of 12:14 UTC, down about 8.5 percent into the European session. Lackluster volumes and low volatility appeared as the primary catalyst for the pair’s dismissive intraday performance.
The latest sell-off in the UMA market followed its attempts to rebound higher in the last two daily sessions. UMA/USDT jumped by around 6.5 percent after locating interim support at $12.39. But bulls showed no interest in staying beyond the $13-resistance target.
That is partially due to the double-dose brought by two Fibonacci Retracement graphs complementing each other near the $13-level. The 61.8% level of the Fib Graph–drawn by $10.09-low to $19.22-high-coincided with the 23.6% level of another Fib Graph, from the swings high sitting at $37.41 to the low near $10.09.
UMAUSDT price targets for the coming session. Source: TradingView.com
Tha left UMA bulls in battle with a tight resistance range of $13.58-$14.04. They gave up to pullback pressure as the token attempted a close above $13.21. Atop that, the origin of correction coincided with the upper trendline of a Descending Channel pattern (in green), making it a triple-dose of extreme bearish sentiment.
Technical Outlook Ahead
If bears remain persistent, then UMA/USDT may likely continue their downtrend inside the Descending Channel while targeting certain levels on its way south.
That brings $12.04 as the next potential downside target, also because of its brief history of guarding one bias against the other. If the price moves below it, then traders could extend their bearish target towards $10.04.
In the meantime, UMA/USDT would keep testing the lower trendline of the Descending Channel as its support. If the pair bounces back, it would do so towards the upper trendline of the Channel, followed by a repeated breakout attempt above the $13.58-$14.04 range.
As it happens, the market would need to claim the 61.8% level of its bigger Fibonacci Graph to establish a bullish reversal. That price ceiling sits near $20.
The latest losses in the UMA market has also followed its association with SushiSwap, a fork of Ethereum-based decentralized exchange (DEX) Uniswap. Ahead of its rally, the founder of SushiSwap had asked users to swap Ethereum for UMA at UniSwap. He further asked the so-called yield hunters to earn SUSHI tokens by transferring UMA from UniSwap’s liquidity pool to its own.
Nevertheless, after the founder exited the SUSHI market following a strong price rally, traders started assuming SushSwap as an exit-scam. The anonymous creator returned later with a name and refuted the allegations. He returned the $14 million worth of ETH that he had secured from the Sushiswap reserves.
I have returned all the $14M worth of ETH back to the treasury. And I will let the community decide how much I deserve as the original creator of SushiSwap. In any currency (ETH/SUSHI/etc). With any lockup schedule you wish.https://t.co/QwFj5SeeuQ
— Chef Nomi #SushiSwap (@NomiChef) September 11, 2020
The price of SUSHI soared by more than 25 percent after that.
But UMA had suffered damage until then. It is now likely for the token to recover its recent losses now that the dust of Sushiswap is behind. And if it doesn’t recover, then $10 appears like a target that may excite bulls into purchasing UMA.