Injective (INJ) has experienced a significant decline since reaching its all-time high (ATH) of $53 in March 2024. Since then, the altcoin has dropped by an alarming 73%, with its price hovering near a 15-month low. Despite this sharp decline, recent market patterns suggest that a potential rebound might be on the cards. Here’s a closer look at the factors influencing INJ’s price movement and the possibility of a recovery.

A Falling Wedge Pattern: A Bullish Signal?

Over the past few months, INJ has shown a steady downtrend, largely following the broader movements of the cryptocurrency market. After failing to break through the $34 resistance level, the price formed a falling wedge pattern on its daily chart. A falling wedge pattern, often seen as a bullish setup, occurs when the price fluctuates between converging trendlines, typically indicating that the market is gearing up for a potential breakout.

However, the recent price action has dragged INJ below its key exponential moving averages (EMAs) — the 20, 50, and 200-day EMAs — signaling a strong bearish sentiment. This bearish outlook was further reinforced by the formation of a “death cross,” where the 20-day EMA crossed below the 50-day EMA and 200-day EMA, marking a continuation of the downtrend.

Despite this, INJ recently hit a 15-month low on February 3, 2025, and has since seen a series of green candles. However, the altcoin struggled to break past the $15.6 resistance, which coincides with the 20-day EMA. For a potential bullish reversal to take hold, a convincing close above this resistance level is necessary.

The Potential for a Recovery

Should INJ manage to break above the $15.6 resistance, the next target for buyers would be in the $18–$20 range. A sustained uptrend beyond this level could pave the way for a more substantial recovery. However, there are risks associated with broader market sentiment, especially considering the volatile nature of the cryptocurrency space.

The Relative Strength Index (RSI) is currently below 50, indicating that buying pressure is insufficient to trigger a strong bullish move. For the price to begin a real recovery, the RSI needs to break above 50, signaling that buyers are gaining control.

The INJ 3.0 Upgrade: A Potential Catalyst for Rebound

Injective’s upcoming INJ 3.0 upgrade could be another crucial factor that triggers a potential price recovery. The upgrade, which aims to reduce the token’s circulating supply significantly until Q1 2026, is expected to create a deflationary effect. As the supply tightens over time, this could drive up the value of INJ, provided that demand for the asset picks up — especially if market sentiment becomes more favorable.

This deflationary approach is crucial for the long-term price movement of INJ, as reduced supply can create upward pressure on prices if demand remains constant or increases.

Positive Market Signals from Derivatives Data

Injective’s derivatives market also hints at optimism for a price recovery. Derivative volume recently saw an 18.63% jump, reaching nearly $199 million, while Open Interest decreased by 7.5%, coming in at around $105 million. Rising volume, combined with declining Open Interest, could indicate that traders are closing positions, which might set the stage for new long positions if bullish sentiment returns.

Additionally, the Long/Short Ratio on Binance has been recorded at 2.11, showing that traders are somewhat optimistic about INJ’s price action in the short term. If sentiment shifts positively, this ratio could rise further, fueling upward momentum.

The Bottom Line

Despite the significant 73% drop from its ATH, INJ is currently navigating a critical juncture. The formation of a falling wedge pattern, combined with the upcoming INJ 3.0 upgrade, suggests that a potential rebound is on the horizon. However, for the altcoin to gain real momentum, it will need to break key resistance levels, especially the $15.6 threshold, and see more consistent buying pressure as indicated by the RSI.

Whether INJ can successfully recover will depend largely on the broader market conditions, particularly Bitcoin’s performance, as well as the overall sentiment in the cryptocurrency space. For now, traders and investors will be watching closely to see if INJ can break its bearish trend and find new bullish ground.