Stacks crypto price jumped to the upper side of the descending channel.
The coin jumped because of its close relationship with Bitcoin.
This rebound could be part of a dead cat bounce.
Stacks price has staged a strong comeback in the past two days even as concerns about regulations in the US continued. STX has jumped by more than 15% in the past 24 hours. In all, it has jumped by over 22% from the lowest level on Tuesday.
A possible reason for the rally
Stacks is a unique blockchain that creates a layer where developers can create applications for the Bitcoin ecosystem. According to its website, the network has over $901 million locked in its staking ecosystem. In the past few months, the network has distributed over 2000 BTCs to stakers.
It is unclear why Stacks price has jumped sharply in the past 24 hours. A likely reason is that this rally in sync with that of other coins. Bitcoin has risen by over 3% in the past 24 hours while other altcoins like Terra Classic and Pepe have jumped by double digits in the same period.
The other reason is that Bitcoin’s ecosystem is growing, helped by Ordinals, the popular NFT platform. Data by TokenTerminal shows that Bitcoin fee revenue in the past 30 days came in at over $102.7 million, making it the second most profitable network in the industry.
Additional data by CryptoSlam shows that the total Ordinals sales jumped to a record high in May. Sales soared to over $195 million in May from the previous $33.2 million.
While Stacks has no association with Ordinals, its success means that more developers could move to its ecosystem soon.
Further, STX price rose because Bitcoin seems safe in the ongoing war on exchanges like Coinbase and Binance. The agency highlighted some of the tokens that it sees as being securities. Bitcoin was not one of them.
Stacks price prediction
The other reason why STX price has jumped is that this could be a dead cat bounce, which happens after an asset dips sharply. On the daily chart, we see that the coin retested the upper side of the descending channel shown in orange. Most importantly, Stacks’ 50-day and 100-day moving averages have made a bearish crossover.
Therefore, I believe that the coin has more downside to go unless it moves above the two moving averages. If this happens, the next level to watch will be at $0.5200, the lower side of the channel.