Bitcoin [BTC] struggled to climb back above the $78k level after retracing below the $80k round number support.
This inability to quickly recover was likely due to selling pressure from short-term holders, combined with the heavy offloading in the spot ETF markets.
As a result, many altcoins have not had the bullish sentiment needed for sizeable capital flows and price moves. CoinMarketCap data showed that the crypto AI sector market cap has fallen by 0.53% over the past week.
The standout performer here was $NEAR Protocol [$NEAR], up 34% in a week. Some others had a more neutral performance, and the Artificial Superintelligence Alliance [$FET] token was down 2.5% for the week.
This weak $FET performance stood in stark contrast to a combination of bullish on-chain developments.
Explaining the $FET structural divergence
In a post on CryptoQuant Insights, analyst Crypto Onchain pointed out that Binance-specific $FET metrics took a dramatic turn. In the past three months, the exchange reserve of $FET has decreased by 20%.
A decline in the number of depositing participants, combined with deeply negative $FET netflows from exchanges, meant fewer participants were moving their assets onto exchanges.
This “inflow drought” reduces spot selling pressure. Alongside falling 90-day reserves, it indicated a sustained supply imbalance.
In other words, the weakly performing $FET might soon get a major boost. A regime shift away from the bears would become a likelihood, sustained by supply-side tightness, the analyst asserted.
The on-chain metrics signaled tightening supply, but the altcoin remained in a bearish regime. The February local resistance level at $0.185 was recently retested as support, and the buyers were able to defend it.
This was a slightly optimistic outcome, but the $0.245-$0.276 remained a critical supply zone overhead. Further higher, the $0.3149 swing high held the bearish higher timeframe structure in place.
A move above this level would be a believable sign of a trend shift. The on-chain metrics indicated bullishness in the medium-to-long term and could hasten such a trend shift.
Final Summary
- The decreased exchange reserves and depleted exchange inflows represented a $FET structural divergence, an analyst observed.
- This supply-side tightness could eventually see the current bearish regime overthrown.
