Bonk Price Risks Losing 200-day Support Amid Declining Funding Rate

BONK price plunged 1.6% to $0.000019 on Monday, bucking the general uptick in the broader crypto market. While the Bitcoin attempt to regain $60000 has uplifted most of the major altcoins, the meme cryptocurrency sector struggle follows. Will the weak momentum grow to prolong correction, or will buyers step in to reverse the trend?

BONK Price Hits Multi-Month Support

Since last month, the BONK coin price has witnessed a high momentum selling, which plunged the asset from $0.000033 to $0.00001745, registering a loss of 48.5%. The falling price now retests the support trendline of a rising channel pattern that has been intact since February 2024. 

Theoretically, the chart pattern drives a steady recovery resonating with the two parallel trendlines. Though the bottom acts as crucial support, a potential breakdown below the lower trendline would also have a major impact.

According to Coin Shares, the layer 1 blockchain Solana recently recorded the largest outflow of $39 Million. This significant outflow coincides with a sharp decrease in trading volumes for memecoins, a category on which Solana has become increasingly reliant. This decline highlights the volatility and changing investor attitudes in the meme coin market, emphasizing the speculative nature of these assets.

The BONK price trading below the daily EMAs (20, 50, 100, and 200) accentuates that the path to least resistance is down. Moreover, a potential death crossover between the 50-and-200-day EMA could accelerate the selling pressure.

Additionally, data from Coinglass shows that the BONK Open Interest (OI)-Weighted Funding Rate is at -0.0161, indicating a predominance of short positions. This negative rate reflects a bearish sentiment, as traders are willing to pay a premium to hold their short positions. 

Should this trend persist, it could erode investor confidence further, potentially leading to a more significant decline in BONK price.

Thus, a bearish breakdown below the lower trendline with a daily candle closing will bolster sellers to drive a prolonged correction. The post-breakdown fall could have plunged the asset 27% to $0.000012.

Conversely, a jump in the ADX indicator above 30% suggests that the current downtrend may soon reach exhaustion, signaling that the asset is potentially oversold. This often leads to a shift in price trends, either sideways or towards a reversal to the upside. 

If the bottom support holds, the Solana-based meme coin price could potentially drive a 30% upswing to $0.000023.