After an increase of 273%, this key indicator indicates that CELO prices are over-expanding

now Altcoin season is here again, There are multiple tokens witnessing significant price increases every day. In a sideways market, a key skill for traders is the ability to predict when an asset will explode—when everything turns green, it’s equally important to know when the rally will end.

This week, CELO began a rapid rebound, creating an almost vertical line on its price chart, but then quickly subsiding, without ushering in a strong second wave.

Apart from paying close attention to the candlestick chart, is there a better way to let traders know in advance when they will end?

A new DeFi program has contributed to the soaring price of CELO

CELO is the native asset of the Celo blockchain ecosystem. Its main goal is to introduce the convenience of decentralized finance or DeFi to smartphone users with insufficient funds around the world. CELO is a practical token that utilizes the proof-of-stake consensus mechanism to facilitate transactions and governance processes on the platform.

On August 30, a consortium of DeFi entities—including Aave, SushiSwap, Curve, 0x, PoolTogether, and Celo— Announce joint education work Aiming to raise global awareness of decentralized finance, they promised to provide grants and rewards of up to 100 million U.S. dollars.

In terms of the direct impact on the price of encrypted assets, CELO will benefit the most from the news, as the Celo platform will become the main infrastructure of the plan. The price of the coin soared immediately, Rose by about 170% in the next 24 hours.

Extraordinary price spikes like this usually end in difficult corrections. However, investors always hope that a more powerful pump is just around the corner. However, in the case of CELO, the first peak of $9 is still the high water mark, and the price of the token has only fallen from there.

Expected price drop

In addition to being one of the stocks with the biggest gains this week, CELO is also one of the few assets with low VORTECS™ scores.

this VORTECS™ score It is a machine learning algorithm that compares the history and current market conditions surrounding digital assets to help crypto traders make decisions.Designed for Cointelegraph Markets Pro For subscribers, the indicator considers a series of variables—including price changes, trading volume, social sentiment, and market prospects—to arrive at a score that assesses whether the current state of a given token is historically bullish, neutral, or neutral. Bearish.

A high score indicates that the model believes that the currently observed conditions are historically favorable; when the algorithm sees a pattern that has appeared in the past before the price has fallen sharply, a low score with a lower frequency will appear.

CELO prices and VORTECS™ Fraction. source: Cointelegraph Markets Pro

As shown in the above figure, when the asset price fell from the peak of $9, the price of the asset briefly rebounded from $7.03 to $7.24, and CELO’s VORTECS™ score fell to the red zone below $30. Although this rally looks like the beginning of the second round of the rally, historical precedents indicate that the situation around the token is bearish.

Traders can use this insight in a variety of ways. Those who want prices to soar again may be pushed to abandon those hopes and lock profits above $7. Another strategy may be to short CELO, betting that its price will soon return to a downtrend.

As for CELO, the asset quickly stabilized between US$5.50 and US$6, which is still a considerable increase compared to the US$4.30 area that broke out during the initial rebound.

Cointelegraph is a publisher of financial information, not an investment advisor. We do not provide personalized or personalized investment advice. Cryptocurrency is an unstable investment and carries significant risks, including permanent loss and total loss. Past performance does not predict future results. The figures and diagrams are correct at the time of writing or otherwise specified. The strategy of real-time testing is not a recommendation. Before making a financial decision, consult your financial advisor.