Bitcoin [BTC] struggled to climb back above the $78k level after retracing below the $80k round number support.
This inability to quickly recover was likely due to selling pressure from short-term holders, combined with the heavy offloading in the spot ETF markets.
As a result, many altcoins have not had the bullish sentiment needed for sizeable capital flows and price moves. CoinMarketCap data showed that the crypto AI sector market cap has fallen by 0.53% over the past week.
The standout performer here was NEAR Protocol [NEAR], up 34% in a week. Some others had a more neutral performance, and the Artificial Superintelligence Alliance [FET] token was down 2.5% for the week.
This weak FET performance stood in stark contrast to a combination of bullish on-chain developments.
Explaining the FET structural divergence
In a post on CryptoQuant Insights, analyst Crypto Onchain pointed out that Binance-specific FET metrics took a dramatic turn. In the past three months, the exchange reserve of FET has decreased by 20%.
A decline in the number of depositing participants, combined with deeply negative FET netflows from exchanges, meant fewer participants were moving their assets onto exchanges.
This “inflow drought” reduces spot selling pressure. Alongside falling 90-day reserves, it indicated a sustained supply imbalance.
In other words, the weakly performing FET might soon get a major boost. A regime shift away from the bears would become a likelihood, sustained by supply-side tightness, the analyst asserted.
The on-chain metrics signaled tightening supply, but the altcoin remained in a bearish regime. The February local resistance level at $0.185 was recently retested as support, and the buyers were able to defend it.
This was a slightly optimistic outcome, but the $0.245-$0.276 remained a critical supply zone overhead. Further higher, the $0.3149 swing high held the bearish higher timeframe structure in place.
A move above this level would be a believable sign of a trend shift. The on-chain metrics indicated bullishness in the medium-to-long term and could hasten such a trend shift.
Final Summary
- The decreased exchange reserves and depleted exchange inflows represented a FET structural divergence, an analyst observed.
- This supply-side tightness could eventually see the current bearish regime overthrown.
