Ape Coin (ape) recovered sharply after falling to its lowest level in two months. But its strong correlation with Bitcoin (bitcoin) and U.S. equities signaled the potential for more losses amid macro risks.
APE rebounds after falling 80% in two weeks
On May 12, APE rebounded nearly 45% to $7.30. An upside retracement followed on May 11 when APE fell about 81% to $5 from its all-time high of nearly $27.50 set on April 28.
Seesaw price action mirrors similar volatility elsewhere in the crypto market, driven by Chaos around TerraUSD (UST) — “Algorithmic stablecoins” whose value plummeted to 23 cents earlier this week, and the Federal Reserve’s Hawks respond Rising inflation.
Meanwhile, the correlation coefficient between ApeCoin and Bitcoin is now around 0.90, which indicates that it trades almost in sync with BTC, i.e. Test multi-year lows.
Dead cat bouncing?
ApeCoin’s rally happened near what appears to be a strong technical support level.
Notably, the APE is holding above $5.82, which coincides with the 0.786 Fibonacci retracement line drawn from the $0.97 swing low to the $23.65 swing high. Meanwhile, the coin’s daily Relative Strength Index reading is just above its “oversold” threshold of 30 — a buy signal.
Therefore, a bounce from the $5.82 support could see APE testing $9.63 (Fibonacci 0.618) as its near-term upside target.
Conversely, if the support is broken further, the APE/USD pair is likely to drop into unknown price territory, confirming that its retracement move is nothing more than a dead cat bounce.
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