The vibrant rally that propelled memecoins earlier this year appears to be experiencing a significant pause, with "Useless Coin" (USELESS) emerging as a prominent example of this market shift. The token has witnessed a notable downturn, prompting a closer look at the confluence of technical indicators and underlying market dynamics that are shaping its current trajectory.
Technical Breakdown Signals Bearish Momentum
The recent price action for USELESS paints a clear picture of declining momentum. The token has broken below an ascending trendline support that had been in place since the beginning of the month, indicating a decisive technical breakdown. After failing to sustain levels above $0.12 in early January, the price has consistently trended downward. This bearish outlook is reinforced by a weakening MACD (Moving Average Convergence Divergence) and a sharp decline in the Money Flow Index (MFI) from a peak of 77 to 35, signaling a significant outflow of capital from the asset. Should this decline continue, the price may retest the critical $0.06958 level, which previously served as a breakout point for its earlier rally.
Institutional Activity and Market Sentiment Contribute to Downside
Beyond technical charts, on-chain data and broader market metrics further explain USELESS's struggle. Institutional sentiment appears mixed but leans bearish, with major entities like Wintermute and Coinbase observed moving over $600,000 worth of USELESS tokens to hot wallets, likely in preparation for selling. While Kraken showed a contradictory move by accumulating tokens into cold storage, the overall impact of institutional selling has been more pronounced. Adding to the pressure, the Long/Short Ratio stands below 1, indicating a higher propensity for selling across the market. Furthermore, Open Interest (OI) has plummeted from $40 million to $33 million, mirroring a substantial drop in trading volume from $122 million to $82 million in a single day, reflecting diminishing interest and increased liquidation. While a short squeeze could theoretically occur if the price reaches $0.1242, breaching the $0.1020 max pain level for bulls could exacerbate the current decline.
