MORPHO crypto surged up to 20% on Feb. 28 despite a risk-off sentiment in the broader crypto market. However, technical indicators have turned bearish for the altcoin, suggesting a potential pullback is on the horizon.
Morpho (MORPHO) soared to an intraday high of $2.44 on Friday, marking a 35% rise from its weekly low and bringing its market cap to nearly $500 million as of press time. The recent price rally was accompanied by a surge in trading activity, with daily trading volume doubling from the previous day to over $94 million.
Founded in 2021, Morpho is a decentralized, noncustodial lending platform on Ethereum that optimizes lending pools by facilitating direct peer-to-peer interactions.
The protocol, which enables overcollateralized lending and borrowing of crypto assets, aims to provide better interest rates for both borrowers and lenders by matching liquidity directly while still relying on traditional lending pools as a fallback when needed.
Most of today’s gains came after Coinbase listed MORPHO on both the Ethereum and Base networks.
As the largest crypto exchange in the U.S., Coinbase has a history of impacting crypto prices with its listings. As earlier reported by crypto.news, the so-called “Coinbase Effect” drove a nearly 30% surge in Popcat’s (POPCAT) price after its listing on the exchange.
Meanwhile, Morpho’s developers also shared a few updates to go along with the Coinbase listing. The firm noted that their smart contracts are now live on multiple blockchains, including Unichain, Mode Network, Hemi, Corn and Sonic. These contracts have been reviewed by independent auditors and come with a $2.5 million bug bounty.
Amid these developments, the hype among its community has pushed MORPHO to trend on Google.
Potential correction on the horizon
Despite the bullish listing announcement driving fresh interest in the altcoin, there remains a significant risk for MORPHO traders.
According to data from IntoTheBlock, about 95% of MORPHO tokens are held by large investors. With over 87% of holders currently in profit, many might decide to sell and lock in gains, especially with the broader crypto market looking bearish.
Bitcoin, the bellwether crypto asset, recently dropped below $80,000, and the crypto fear and greed index hitting a two-year low could prompt a sell-off among risk assets like MORPHO.
Technical indicators have also flashed bearish signals. On the 1-day MORPHO/USDT price chart, MORPHO remains under the 50-day moving average, suggesting that bears continue to dominate its market.
The Supertrend indicator supports the view as it was seen flashing red and remains above MORPHO’s price.
Although MORPHO is still trading above the descending trendline that has been forming since Jan.17, a fall back below the trendline at $2 today could signal a bearish reversal as it marks a key psychological resistance level. In that case, MORPHO might drop further toward its local low of $1.75, last seen on Feb. 8.
However, the setup could be invalidated if market sentiment improves and it rallies higher.
At press time, MORPHO had already lost some of its daily gains, exchanging hands at $2.26 per coin.
