Key Takeaways
PENGU’s price has been falling since hitting the $0.04-price level. Price consolidation and seller dominance caused the drop. However, the CPI data sparked some signs of reversal.
Pudgy Penguins (PENGU) dropped by more than 11% on the charts, with macros pointing to potential continuation of this trend. Prior to this price decline, however, PENGU had flipped all Solana memecoins by market capitalization.
In fact, its price had surpassed the $0.048-level, before dropping. Whales’ sell-offs and a hike in shorts were some of the contributing factors to this decline.
Insider wallets do some offloading
Insider-linked wallets started selling their tokens from mid-July. On-chain analysis data revealed that more than $66 million PENGU had been moved to exchanges in this period for profit-taking.
The tension before the release of the CPI data also attributed to the drop. Moreover, liquidity had been pulled from most altcoins, except Ethereum (ETH), due to Bitcoin’s dominance.
As a result, PENGU’s price entered a price correction phase, one that seems to ending after CPI annual inflation data was less than the expected 2.8%.
PENGU sellers exert their dominance
Whales’ behavior was replicated by other market participants too. In fact, according to CoinGlass data, the long/short ratio was 0.94 at press time, with sellers dominating by 52%.
Previously, the seller dominance dipped below the 0.90 ratio and rose sharply before the monthly candle closed. A similar scenario can be anticipated in the current situation.
Source: CoinGlass
The Open Interest declined to $464 million from a high of $607 million on 24 July. The volume, on the other hand, was also hit. Back in mid-July, the volume was more than $5 billion. However, at the time of writing, it had been reduced to $1.07 billion.
Worth pointing out though that the funding rates on most exchanges have been turning positive. This may be a sign that buyers are making their way back. To put it simply, the aforementioned drop could be short-lived.
Can the memecoin bounce off the diagonal?
The day’s open started with the price at $0.037. The sellers pushed the price just below $0.355, a level where PENGU found its floor during mid-day.
The release of the macroeconomic data resulted in the price bouncing off the diagonal support level, as anticipated by Satoshi Flipper on X (formerly Twitter).
Since the panic lacked volume, it meant that the rotation of capital was controlled. However, the slow movement to the upside suggested sellers might still have some control, with the declining resistance being the ultimate test for a bullish flip.
Source: Satoshi Flipper/X
Failure to break above this resistance would subject the memecoin to more consolidation or even a drop below the formation.
Finally, what is more interesting is the fact that PENGU appeared to be ranging around its highs. Such a pattern has historically signaled bullish continuation on the charts.
