AI16Z Shows Pivot Signs After Hitting The Lower Range Of Key Fibonacci Retracement Zone

AI16Z has been experiencing its first major retracement since the start of January after its parabolic price action toward the end of 2024.

The biggest question among its holders is whether it will come back with as much vigor as its heavily bullish price action in November and December.

Interestingly, AI16Z just entered a noteworthy price level where it could potentially experience a demand resurgence.

The cryptocurrency has retested the 0.5 and 0.618 Fibonacci retracement zone after a bearish second half of the week.

This is also the second time that AI16Z has retested the same retracement zone.

It previously bounced back from the same range just before mid-month, after which it rallied by roughly 76%. Could a similar outcome occur again?

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Bullish expectations have been high ever since the latest retest of the same Fibonacci range. However, price has continued dropping, leading to a surge in liquidations.

Long liquidations amounted to $4.71 million in the last 24 hours at the time of writing (18 January). This was the highest single day long liquidations recorded so far this month.

The expectations that short term support will hold at or near the $0.95 price level may have encouraged a surge in leveraged longs.

Heavy liquidations at its current zone could potentially push price lower.

Is AI16Z Primed for Another Rally?

The cryptocurrency registered a 1.15% uptick in open interest to $192.01 million. A relatively modest gain but one that demonstrates some upside after the recent dip since mid-month.

In addition, it demonstrated a significant surge in weighted positive funding rates. This may have been the result of the bullish expectations, thus the liquidation trap.

This is the same day that spot flows were mostly negative.

The spot outflows further support the observations of a leverage shakedown.

Although this could lead to a break below the current support level, it may also offer a deeper discount and more clarity regarding demand.

Based on the presence of significant sell pressure, it was clear that investors were not quick to buy back AI16Z despite the recent discount. There are two major possibilities behind this outcome.

Previous holders that sold at or near the recent top are not as quick to buy back due to expectations of more downside.

Or, the coin may not rally much further from its current level, thus liquidity has been channeled elsewhere.

Will There be Redemption Down the Road?

AI16Z’s recent surge in funding rates and slight uptick in open interest at previously tested support may indicate growing interest.

However, the presence of strong sell pressure near the same support suggests that more downside could be on the cards.

The above scenario highlights the bubbling battle between the bulls and the bears. A win for the bears means price may dip to the next support level near the $0.56 price range.