The Sandbox (SAND) has been facing bearish pressure despite its earlier rally, leaving traders questioning whether it can maintain momentum or continue its downward trend.

Recent Price Action and Market Behavior

SAND, the native token of the popular metaverse platform The Sandbox, has recently experienced a significant 75% rally over the last week, boosted by gains in the broader cryptocurrency gaming sector. However, the token’s price has seen a 4% drop in the past 24 hours, trading at $0.602 at press time. Trading volumes have decreased by 51%, signaling a slowdown in buyer interest and heightened uncertainty.

The market’s increasing volatility is evident in the widening Bollinger bands on the four-hour chart. Initially, strong bullish momentum saw SAND surpass the upper Bollinger band, but it has since retreated toward the middle band. This price action suggests that the initial buying pressure is easing, and the market may be entering a consolidation phase.

Technical Indicators Point to Bearish Sentiment

The Relative Strength Index (RSI) has dropped from overbought levels above 70 to a more neutral position at 53. The RSI’s downturn below the signal line further indicates that selling pressure is dominating, which could continue to push the price lower if the trend persists.

SAND is currently holding immediate support at $0.58, but if this level fails to withstand further selling, the price could fall to the lower Bollinger band around $0.50, potentially marking a more significant downturn.

Rising Liquidations Fuel Volatility

One of the key drivers behind the current volatility is the rising liquidation rate. Over the past four days, traders with leveraged positions—both long and short—have seen over $44 million in liquidations, according to data from Coinglass. This forced closure of positions has contributed to increased market fluctuations, with a significant impact on open interest, which dropped by 6% in the last 24 hours to $168 million. These liquidations indicate that traders are less willing to open new positions, potentially signaling a more cautious market outlook.

While reduced activity in the derivatives market could mean lower volatility, it also suggests that SAND could face a period of consolidation, further delaying any potential rally.

Declining Active Addresses Signal Weaker Market Sentiment

Another concerning factor for SAND’s short-term prospects is the decline in active addresses. Data from CryptoQuant reveals that the number of active addresses associated with SAND has dropped significantly, from 3,809 to 1,821 in the last three days. This reduction points to a lack of fresh buying interest and weakened market sentiment, which could contribute to a further decline in price if demand does not pick up.

What’s Next for SAND?

The outlook for SAND appears uncertain. While there is potential for recovery if buying activity increases, the current lack of fresh demand combined with bearish technical indicators raises the risk of further price declines. If the support level at $0.58 fails and the price drops below the lower Bollinger band, market sentiment could deteriorate further, pushing SAND to even lower levels.

Traders should closely monitor the behavior of the RSI and Bollinger bands, as these will be key indicators of whether SAND can regain bullish momentum or if further downturns are likely. If SAND breaks below key support levels, further price dips may be on the horizon.