Sell time? Overbought cryptocurrency signals a bearish reversal

The Sui Network (SUI) has escalated the cryptocurrency market ranks at an impressive speed and price performance amid growing demand. This, however, raised multiple ‘Overbought’ statuses in different time frames, together with bearish divergences that could signal a selling opportunity.

Overall, SUI’s momentum is strong, and the crowd’s sentiment is dominantly bullish as the token tests a new all-time high. Yet, this makes the perfect opportunity, liquidity-wise, for whales and early investors to sell and realize massive gains.

The fundamental problem with an all-time high is that most holders are in profit and more likely to sell. SUI currently accumulates 184% gains year-to-date, most of which it acquired in the last 30 days, up 118%.

Moreover, Sui’s token displays an overbought status for its Relative Strength Index (RSI) in all time frames except the 15-minute. Finbold retrieved this data from CoinGlass‘s RSI heatmap on October 13, with SUI as the only weekly overbought cryptocurrency.

In particular, Sui’s RSI marks 73.43, 74.7, 71.65, 73.84, and 72.68 at the 1-hour, 4-hour, 12-hour, 24-hour, and 1-week time frames, respectively.

Overbought SUI price analysis and bearish divergence

Looking at Sui’s daily price chart, according to TradingView‘s crypto index, gives us a similar result of an overbought SUI. The daily RSI marks 72.07 in this index at $2.21, retracing after reaching a $2.29 all-time high.

Notably, the chart also displays a bearish divergence starting on September 24, which could suggest a reversal from this rally. The bearish divergence appears with SUI’s price making three subsequent higher highs while the RSI makes three subsequent lower highs.

We also spotted this pattern in the weekly and 4-hour chart against the dollar.

What other technical analysts say about SUI’s price bearish reversal

Interestingly, a reversal here is expected according to multiple other indicators and analysts. Finbold, for example, reported a Sui price prediction by the reputable trader, pejman_zwin, on TradingView, using the Elliott Wave theory.

“Currently, SUI is moving near the Resistance lines and the Potential Reversal Zone. According to the theory of Elliot waves, SUI seems to be completing the main wave 3. (It is completing the microwave 5 of the main wave 3). I expect SUI to rise another +20% or so and then start to correct. SUI correction can be -20% to -40%.”

– pejman_zwin

The forecasted 20% rise is already completed, previously targeting $2.30 per token. Now, if the analysis plays out as expected, SUI could be heading to a -20% to -40% correction wave four.

Sui Network fundamental analysis

Nevertheless, the Sui Network gained the spotlight due to its solid technology stack and distinguished user experience. Many cryptocurrency investors and users have deemed SUI the Solana (SOL) killer, resulting in a capital inflow to the project.

Recently, Circle deployed its dollar stablecoin USDC natively on the Sui Network, bringing relevant liquidity to the ecosystem. A day later, Grayscale announced the Grayscale SUI trust, opening doors for institutional exposure to the token.

SUI tokenomics raises concerns

On the other hand, SUI’s tokenomics raises concerns, given a highly weighted distribution to private investors and Mysten Labs.

With less than 30% of all already distributed tokens in circulation, Sui has a high fully diluted value (FDV), most of which is being staked while still locked, increasing the asymmetry against retail traders and investors.

Finbold reported October’s $100 million monthly unlock of SUI tokens, illustrating the expected selling pressure at such profit levels. Series A and B investors received the largest unlocked share, totaling 61%.

In conclusion, while Sui’s technology, user experience, and adoption news sets the path for a bullish long term, its tokenomics and an overbought status, together with a spotted bearish divergences foreshadow an impeding correction and short-term weakening for SUI’s price.