SEI loses key support – the 17% drop may not be finished

Sei [SEI] crashed by more than 17% in the past 24 hours at press time. While this massive decline was consistent across the crypto market, which lost more than 5%, SEI's network activity and capital outflows amplified its losses. As per SeiScan, the network saw weak activity since the beginning of June. In particular, its daily transaction fees declined by 38%, from 3,849 SEI to 2,360 as of writing. The situation was the same with the average daily transaction fees, which also declined by 39%, reaching about $0.0002. These metrics showed low network usage because they are directly correlated with fee revenue — or, in plain terms, fewer people willing to pay anything, even fractions of a cent, to use the chain.

Additionally, data from DefiLlama showed that the DEX volume of the token has been declining since June started. At the start of the month, SEI held around $15 million, but it has since dipped to $11.44 million as of writing, a 24% decline. Moreover, capital has been steadily leaving SEI's Futures market since the mid-May peak at $0.08. In fact, over the past 24 hours, more than $13 million was sold, accelerating the price drop. These figures highlight how leverage amplified the crash, given the highly leveraged nature of the Futures market — which, for once, was not the perp DEX's marketing department's preferred talking point.

Worth noting is its stablecoin market cap, which lost about a percent during this period. The data indicated that apart from capital inflows, liquidity was being squeezed, which discourages participants from trading the token. On the charts, the weakness was evident as SEI lost a major slanting trendline support that had been holding price for more than two months. Since April, SEI had been making higher highs except towards the end of May.

SEI failed to beat its May high of $0.08 even after dipping to this slanting support as it had been doing. In fact, it formed a double top at around $0.07, a sign of diminishing buyer dominance. At the time of writing, the MACD denoted this shift in dominance from buyers to sellers as the red bars continued to grow bigger. Therefore, increased persistence by bears may result in further decline.

Notably, the RSI Divergence indicator printed a buy signal after hitting the oversold territory, increasing the potential for a reversal at $0.04845, which is where the altcoin initially started its rally to $0.08. However, more factors needed to align for such a reversal to happen. For instance, capital inflows and a revival in network usage. Furthermore, a shift in sentiment in the broader crypto market is important — because, as always, one altcoin's hope tends to live and die with whatever Bitcoin is doing that hour.