The price of Fetch.ai (FET) has faced notable challenges recently, with its price dropping over 8% amidst the ongoing AI cryptocurrency boom. As the second-largest AI coin by market cap, FET is struggling to maintain its position in a rapidly evolving sector, particularly as its competitors are seeing impressive gains.

FET Faces Rising Competition in the AI Crypto Market

Despite its strong position in the AI cryptocurrency space, FET has been unable to keep pace with some of its competitors. Over the past week, the price of FET dropped by 8.16%, significantly lagging behind the performance of other AI coins like RNDR and WLD. RNDR, for example, has seen an impressive 39.14% increase, while WLD followed with a 17.5% rise.

This performance gap between FET and its peers has led to worries about its future trajectory. If RNDR continues to rise by just 15% more and FET remains stagnant, the two coins could reach parity in market capitalization, potentially shifting the rankings in the AI crypto sector. FET’s inability to capitalize on the growing AI trend may result in a loss of momentum and could threaten its standing as a leading AI cryptocurrency.

Whale Activity Declines: A Signal of Caution

Another concerning factor for FET is the decline in whale activity. Wallets holding between 1,000,000 and 10,000,000 FET have decreased in number over the past week, from 153 to 149. These whale addresses are key players in the market, often dictating price movements due to the size of their holdings. The recent decline in whale activity could signal reduced confidence in the asset’s near-term prospects, especially if large holders choose to liquidate their positions during periods of market uncertainty.

The drop in whale addresses is especially significant considering that large holders typically offer a degree of price stability. The fact that whale activity remains below the levels seen in early November suggests that many of FET’s largest investors are still uncertain about the coin’s potential, contributing to its current price struggles.

Bearish Signals: A Possible 16% Price Correction

Technical analysis of FET’s price chart reveals potential bearish signals, which could result in a further decline in price. The short-term Exponential Moving Average (EMA) has been declining sharply, bringing it closer to crossing below the longer-term EMA. If this happens, it will form a “death cross,” a classic bearish pattern that often signals a shift toward a downtrend.

In the event of a death cross, FET could test its first level of support at $1.18. If this support level fails to hold, the price could experience a deeper decline, potentially reaching $1.08, representing a 16% correction from current levels. This scenario would further dampen the sentiment around FET and could intensify the selling pressure from short-term traders.

Potential for Reversal: Key Resistance Levels

While the technical indicators currently suggest a bearish outlook, there is still the possibility of a bullish reversal if the market shifts in favor of FET. The key resistance levels to watch are $1.45 and $1.53. If the price can break through these levels, it could pave the way for a significant rally, with potential to reach $1.64, a price increase of around 35%. However, such a move would depend on broader market conditions and a shift in investor sentiment.

Conclusion: Caution and Opportunity for FET

FET’s recent performance has highlighted the challenges it faces in maintaining its position within the competitive AI crypto market. The coin’s 8% price drop and the decline in whale activity are signaling caution among investors. The potential formation of a death cross could trigger a price correction, testing support at $1.18 and possibly sending the price as low as $1.08.

However, if FET can break through its resistance levels and regain momentum, it still has the potential for a strong recovery. Traders will need to monitor key support and resistance levels closely in the coming days to assess whether the bearish trend will continue or if FET can turn things around and capitalize on the growing AI cryptocurrency trend.