DeepBook Protocol (DEEP) has experienced a notable surge recently, with the token increasing by over 430%. However, the momentum seems to have stalled, as the asset shows signs of exhaustion, and traders are increasingly betting on a decline. Currently trading near $0.2067, DEEP is facing potential further downside, with the $0.157 level emerging as a key support zone to watch.

A Possible 22% Drop on the Horizon?

DEEP’s price could drop by over 22%, with the $0.157 level marking a likely downside target, according to recent market analysis. The token’s recent upward surge has now entered a phase of consolidation, as profit-taking and overbought conditions put pressure on the price. A bearish sentiment has started to take hold, evidenced by several key indicators and growing short interest in the market.

Bearish Signals Intensify with Short-Led Market Sentiment

The most concerning signal for DEEP’s short-term prospects is the current OI-Weighted Funding Rate, which sits at -0.2448%. This reflects increased short-selling activity, as traders are betting on a price drop in the near future. A negative funding rate indicates that the market is dominated by bears, further suggesting a higher likelihood of a sell-off.

This negative sentiment is supported by the market’s reaction in recent days. Over the past 24 hours, DEEP’s price has dropped more than 15%, signaling a clear shift in market momentum. Additionally, DEEP’s trading volume has fallen drastically, with a 55% drop during this period, reflecting reduced market participation and weakening investor confidence.

Technical Analysis Points to Correction

From a technical perspective, the recent price action on DEEP’s chart signals that the token may be due for a correction. AMBCrypto’s analysis highlights the appearance of a bearish engulfing candlestick pattern at the recent local top, a classic sign of a potential reversal. Should this pattern confirm, the price could drop by up to 22%, with the $0.157 support zone as the next significant level.

Momentum indicators also support this outlook. The Relative Strength Index (RSI) for DEEP currently stands at 78, which places the token firmly in overbought territory. This suggests that the asset has been overextended, and a pullback may be imminent. Furthermore, the Chaikin Money Flow (CMF) sits at -0.05, indicating that money is flowing out of DEEP, which further underscores the mounting selling pressure.

On-Chain Data Shows Mixed Signals

While the technical and price indicators paint a bearish picture, on-chain data provides some counterbalance. Despite the current sell-off, there is evidence of potential accumulation, with significant outflows of DEEP tokens from exchanges. According to data from CoinGlass, over the past 48 hours, exchanges saw an outflow of $870K worth of DEEP tokens. This could suggest that some investors are accumulating the asset at lower prices, possibly anticipating a rebound.

However, the ongoing bearish sentiment still outweighs these signs of accumulation. With the token’s price declining and short positions intensifying, many traders are choosing to exit their positions, contributing to the overall negative market sentiment.

Liquidations and Dropping Open Interest

Another key factor contributing to DEEP’s downward pressure is the wave of liquidations in the market. In the past 24 hours, 19% of DEEP traders had their positions liquidated due to the price decline. This liquidation event has caused a significant drop in open interest (OI), which further suggests a weakening market and a lack of confidence from traders in the short term.

As the price continues to fall and liquidation pressures mount, the risk of further downside increases. A reduction in open interest usually indicates that fewer traders are willing to hold positions, which could make the market more susceptible to sudden moves in either direction.

The Road Ahead for DEEP: Accumulation or Correction?

The outlook for DeepBook Protocol remains uncertain, as it faces a crucial test at the $0.157 support level. The current market conditions suggest that unless there is significant accumulation or a shift in investor sentiment, a corrective move is likely before any potential upside.

With both technical and on-chain indicators pointing toward a bearish short-term outlook, DEEP may need to consolidate and stabilize before it can make another attempt at bullish momentum. For now, traders should remain cautious and monitor the $0.157 level closely, as this could determine whether DEEP is set for further decline or a possible recovery in the future.

Conclusion: A Crucial Moment for DEEP

DeepBook Protocol (DEEP) finds itself at a critical juncture, with bearish signals stacking up and a potential drop to $0.157 on the horizon. As the market shows increasing signs of exhaustion, the next few days could prove pivotal in determining whether DEEP can recover or if the bearish momentum will continue to dominate. With a large portion of the market currently betting on a downside, only time will tell if DEEP can turn the tide and find its footing again.