Why SKY crypto’s 10% rally faces test amid $65M buyback wave

Key Takeaways

What’s driving SKY price action up?

SKY price rose from the surge in buybacks, daily trading volume, staking activity, and market structure shifts.

Will SKY hold up to the uptrend?

If the price stays above the broken trendline, SKY could rally back to the $0.0620 level.

Sky [SKY] has potentially started its recovery, regaining the $1 billion market cap.

The ecosystem is racking up penalties, with more than 84% upgraded to SKY. This comes with a 10,000 MKR upgrade in the past month, accumulating about $100K in fees.

In the past 24 hours, SKY price rallied by more than 10%, driven by volume and the buyback program. The daily volume increased by 78%, indicating more trading activity, according to CoinMarketCap.

Why is SKY’s price up today? 

According to SKY Money, buybacks have been steadily rising since early November. At press time, the total buybacks stood at 1.395 billion tokens, valued at $65.64 million, following the addition of 6.21 million tokens.

However, currently, the buybacks have slowed, dropping by 2,250 SKY despite being only halfway complete. On average, each transaction has been worth about $10,000, based on SKY Money data.

Source: SKY Money

Furthermore, the altcoin was seeing a surge in staking, which meant increased network security. About 35.94%, equivalent to $385.48 million, of SKY was staked.

According to DefiLlama, daily volume rose by $10 million to $23.55 million, an increase of 1.7% from the previous day’s $13.44 million.

Source: DefiLlama

Additionally, the fees for the fourth quarter were $26.75 million. Nevertheless, this was less than the $45.3 million recorded in the previous quarter.

Will TVL hinder price appreciation?

SKY broke above a descending trendline on the 4-hour charts and confirmed with a retest. The trendline has been in play for the last two weeks, which indicates seller dominance during this period.

This seller action was once again evident on the charts after the price hit the $0.050 zone. Consequently, the RSI and Bull Bear Power (BBP) indicators started showing a shift in direction.

At the time of writing, the RSI rejected the oversold threshold, while the BBP decreased from 0.00625 to 0.00389. This was an indication of buyer exhaustion or profit-taking following this mini surge.

The double-digit rally elicited the sentiment that SKY could have hit its bottom. This is due to the slight recoveries seen in the altcoin market in the past few days. If the uptrend continues, the altcoin could potentially reach $0.0620 or beyond.

Source: TradingView

However, there was a risk of reversal after the Gravestone Doji, which is a signal for bear reversals or pullbacks during uptrends.

While there was anticipation for a further uptrend, the Total Value Locked in the ecosystem was dipping. In the past thirty days, TVL declined from $7.7 billion to $6.6 billion, which could challenge this trajectory.

Source: DappRadar

These metrics for SKY show mixed sentiments, though they leaned more on the bullish side. However, for this to be sustained, SKY’s price needed to hold above the broken trendline.