Sonic (S) price has been on a downward spiral in recent weeks, with bearish technical indicators and slowing momentum across its ecosystem. The price of Sonic plummeted by 15% to an intraday low of $0.314 on June 13, marking a staggering 68% decrease from its peak earlier this year. This sharp decline has brought its market capitalization perilously close to dropping below the $1 billion mark, down from a high of $3.15 billion in January.
The decline in Sonic’s price can be attributed to rising geopolitical tensions that sparked a flight from risk assets on June 13. Following Iran’s military attack on Israel and escalating retaliatory threats, the global crypto market experienced a significant 7% loss in value, with Sonic being among the hardest-hit assets.
Despite Coinbase’s recent confirmation of an S token listing, which briefly drew attention to the project, the overall trend remains bearish. On-chain data indicates sustained weakness across the Sonic network, with key metrics pointing to a decline in activity. The total value locked (TVL) across DeFi protocols on the Sonic chain has dropped from nearly $2 billion in May to $1.54 billion. Prominent protocols like Silo Finance, Pendle, AAVE, and Beets have witnessed TVL decreases ranging from 35% to 50% over the past month.
This decrease in network activity has translated to a decline in Sonic’s revenue generation, with daily on-chain revenue plummeting to just $5,977, compared to a peak of over $42,000 in May. Additionally, stablecoin supply on Sonic has contracted by nearly $200 million this year, indicating weakened liquidity and reduced user activity on the network.
Furthermore, negative funding rates across exchanges point to bearish sentiment among traders, with the funding rate hitting a low of 0.05% on May 13. This suggests that traders anticipate Sonic’s price to fall below the spot rate, further contributing to downward pressure on the token.
In light of these bearish on-chain indicators, Sonic’s price is likely to face continued downward pressure in the near term, unless there is a significant turnaround in ecosystem activity and investor sentiment.
From a technical analysis perspective, Sonic’s price has been in a downward trend on the 1-day USDT chart. The token breached key support levels, including $0.32 and $0.38, forming a double-top pattern around $0.618, a bearish signal. The price has been contained within a falling broadening wedge, indicating ongoing downward pressure. The death cross formed by the 20-day moving average crossing below the 50-day moving average further reinforces the bearish outlook.
The MACD lines are pointing downwards, while the Aroon indicators confirm a strong downtrend. The next major psychological support level for Sonic is around $0.30, but a bullish reversal could occur if buyers push the price above the upper boundary of the wedge, potentially sending the token back above $0.399.
In conclusion, Sonic’s price is likely to continue sliding in the coming weeks, with limited signs of a strong recovery unless there is a significant improvement in ecosystem activity and investor sentiment. Please note that this article does not constitute investment advice and is intended for educational purposes only.