There has been a gradual resurgence in trading activity in the cryptocurrency market in the past week. This comes after an extended period of consolidation where most traders stayed their hands from executing any significant trades, causing the market to stagnate.
Global cryptocurrency market capitalization surged by 10% in the past week. Mirroring this rally, the meme coin market has also experienced significant growth, pushing coins like Floki (FLOKI) to their highest price levels in seven days.
Floki’s Price Rise Might Be Due to Speculative Trading
At press time, FLOKI trades at $0.00015. However, while the meme coin’s price rose during the review period, its daily active and new addresses count declined.
Data from IntoTheBlock showed an 11% decline in the daily count of addresses involved in at least one FLOKI transaction in the past seven days.
Also, during the same period, the number of new addresses created to trade the meme coin fell by 16%.
Read More: What Are Meme Coins?
Floki Daily Active Addresses. Source: IntoTheBlock
When an asset’s price rises while its daily active and new addresses decline, the price rally might be driven by speculative trading and not actual demand for it. Traders may be buying or selling the asset based on market sentiment or news, leading to a price increase without a corresponding rise in actual network activity.
In FLOKI’s case, the price rise may be due to the activity surge in the general meme market and not because of a hike in its demand by traders.
Despite the price rally, FLOKI remains undervalued, according to its Market Value to Realized Value (MVRV) ratio.
The token’s MVRV ratio shows negative values when assessed over various moving averages. Specifically, FLOKI’s MVRV ratios for the 30-day and 90-day moving averages were -25.06% and -101.31%, respectively, at the time of writing.
Floki Market Value to Realized Value Ratio. Source: Santiment
This metric measures the ratio between an asset’s current price and the average price at which all its coins or tokens were acquired.
Historically, when an asset’s MVRV ratio is below zero, it suggests that its market value is below the average purchase price of all its tokens in circulation. When this occurs, the asset is said to be undervalued and presents a buying opportunity.
FLOKI Price Prediction: Meme Coin Poised to Shed Recent Gains
FLOKI’s declining Chaikin Money Flow (CMF), while its price rallies, suggests its value will soon fall. This indicator measures how money flows into and out of an asset.
A bearish divergence is formed when an asset’s CMF declines while its price climbs. This signals that the price rise is not supported by strong buying pressure or liquidity. Potentially leading to a future price correction.
If this happens, FLOKI’s price will plummet to $0.00014.
Read More: 7 Hot Meme Coins and Altcoins that are Trending in 2024
Floki Price Analysis. Source: TradingView
However, if it manages to extend its rally, FLOKI will exchange hands above $0.00016.
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