Stacks (STX) pared a considerable portion of the gains it made on March 10 as the euphoria surrounding its $165 million pledge to support Bitcoin (BTC) projects showed signs of fading.
STX's price dropped by over 30% to reach a level as low as $1.33 on March 11 when measured from its week-to-date high of $1.94. The selloff, in part, appeared technical as the $1.94-top fell in the same range that served as solid support between October 2021 and January 2022, only to flip later to become a resistance area.
It also appears that traders spotted selling opportunities due to STX's long wick candlestick on March 11. Stacks rallied by as much as 73% into the day while forming a disproportionally long bullish wick on the daily chart that hinted at upside exhaustion.
What pushed STX higher?
The rally in the STX market on March 10 coincided with the launch of "Bitcoin Odyssey," a $165 million fund to develop Web3, decentralized finance (DeFi), and nonfungible token (NFT) projects on the Bitcoin blockchain by harnessing Stacks' open-source network for Bitcoin-based smart contracts.
Notably, STX serves as a utility token inside the Stacks ecosystem to pay for network activity and contract execution. STX owners can also stake their holdings on the Stacks network via "Stacking" to support its blockchain's consensus mechanism. In return, they earn BTC rewards.
It appears traders flocked to purchase STX en masse, anticipating a rise in its demand after the Bitcoin Odessey's launch. For instance, cryptocurrency exchange OKcoin, the main backer behind the $160-million-fund, promoted the Stacks token for its bullish outlook, saying it is "not a bad time to get in on" Stacks.
All-time high ahead?
Interestingly, STX's ongoing price rally appeared at a confluence of two key support levels, with at least one suggesting that the Stacks token is heading to a new all-time high next.
This confluence comprises an upward sloping trendline that has acted as an accumulation point for traders since early 2020 and the 0.5 Fib line (near $1.50) of the Fibonacci retracement graph made from $0.04-swing low to $2.82-swing high.
STX now looks to close above its two interim exponential moving averages (EMA) — the 20-week (green) and the 50-week (red) EMAs — following its rebound from the dual-support area. A successful breakout may have the Stacks token retest another upward sloping trendline that has served as a resistance level since 2020.
Related: Bitcoin spikes above $40K as Russia sees 'positive shifts' in Ukraine war dialogue
Conversely, a pullback from the 20-50 EMA resistances could have STX break below its ascending trendline support toward 0.786 Fib line near $0.63.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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