Monday, February 6, 2023

Anchor Protocol Rebounded Fast After Dropping 70% In Two Months

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Anchor protocol rebounded fast after the sharp drop of 70% in the past two months, and the total value locked inside it, reached an ATH earlier this week so let’s read more in today’s latest blockchain news.

Anchor Protocol rebounded back to the bullish sentiment after dropping by over 70% in the previous two months. The ANC price rebounded a little over 42.50% between May 1 and May 6 and reached $2.26 which is the highest level in three weeks but the token still experienced a sell-off right after and rammed into a strogn resistance confluence. That consists of a 50-day exponential moving average and 0.786 Fib line of the Fibonacci retracement graph from the $1.32 low to the $5.82 high as the charts show.

anchor protocol
Anchor Protocol TVL. Source DeFi Llama

The continued pullback over can see the ANC price dropping to its rising trendline support and coinciding with the floor near the $1.67 level and preceded a 175% price rally between February 20 and March 5. In the meantime, the break below the trendline can risk crashing ANC towards the 1.00 Fib line near $1.32 or 30% below the price of today at $1.92. ANC’s daily relative strength index increased from below 30 to around 50 in the past week and hit an upside strength level for the Anchor market unless the readings cross 70 as the overbought threshold. The favorable RSI shows that the protocol has the potential to break above this resistance confluence around $2.28 with the next upside target peaking around the 0.618 Fib line near $3.

The sharp upside retracement in the Anchor Protocol market coincides with the continued capital inflow into the liquditiy pools and in detail, the TVL inside Anchor’s savings and borrowed pools surged to $16.48 billion from $8.6 billion almost a 100% rise. In doing so, the reserves reached a new high of $17.15 billion on May 5. The users continued to commit funds to the Anchor Protocol because of the steep annual yield of 19.5% which made it the biggest liqudity pool within the LUNA blockchain ecosystem.

ANCUSD daily price chart. Source TradingView

Anchor expanded the services to Avalanche which is another base-layer blockchain and plans to function on the DOT ledger. ANC is a governance token with the Anchor Protocol’s decentralzied money market ecosystem and offers the holders a percentage of the protocol earnings. Anchor Protocol’s expansion into another ecosystem also promises to generate more demand for ANC. The proposals like vote-escrowed ANC enable holders to lock their tokens for the preset period in return for better voting rights and staking rewards that can boost the ANC demand.

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