Nervos Network’s CKB rockets, but gains could be limited

The Nervos Network token was one of the best-performing cryptocurrencies on Friday, Sept. 13, as it surged to a high of $0.018, its highest level since June 7.

Nervos Network (CKB), a layer-2 network, jumped as investors anticipated more purchases by South Korean traders after it was listed by Upbit.

These traders can now buy the token using U.S. dollars, South Korean won, or Tether (USDT).

Data from CoinMarketCap shows that South Korean traders were among the most active, driving the price up. The CKB/KRW trading pair saw a 24-hour volume of over $170 million on Upbit, followed by Binance, which handled over $122 million.

Cryptocurrency prices often jump sharply after they are listed on major exchanges like Binance, Coinbase, and OKX.

However, these gains tend to be short-lived, often leading to a significant pullback once the initial hype dies down. For example, Alpaca (ALPACA) jumped by over 150% after being listed by WhiteBit in August but has since dropped by over 44% from its peak.

Nervos Network is a proof-of-work layer-2 project that aims to enhance Bitcoin (BTC) by incorporating programmability and scalability. It achieves this using the RGB++ protocol.

Like Stacks (STX), Nervos aims to do for Bitcoin what other layer-2 networks like Arbitrum, Polygon, and Base did for Ethereum (ETH) network. According to its website, some of its ecosystem dApps are JoyID, a passwordless wallet, Huehub, the first orderbook exchange, and Omiga, an inscription protocol.

Nervos Network formed a falling wedge

On the daily chart, the CKB token formed a “God candle,” soaring to a high of $0.018. This rebound occurred after the token formed a falling wedge chart pattern, a popular bullish signal. It also created an inverse head and shoulders chart pattern.

In most cases, these “God candles”—sudden bullish spikes—tend to be short-lived. Last week, KITTY and GME tokens surged after Roaring Kitty’s return on X. They have dropped by over 20% this week. 

Therefore, there is a likelihood that the Nervos Network will retreat and retest the psychological level at $0.01, a drop of nearly 40% from the current level.