Why Tezos price is at risk of dropping between 10% to 30%
|- Tezos price is under siege from tail risks that got inflated overnight.
- XTZ price dropped almost 5% on the back of Coinbase earnings.
- Another leg lower could materialise on the back of US inflation print breaking investors’ sentiment.
Tezos (XTZ) price action is deteriorating quickly after the shortfall from Coinbase earnings printed overnight at the US closing bell. While some cryptocurrencies saw a slight recovery in the ASIA PAC session, XTZ price sees investors booking gains as a big tail risk, and technical rejection adds to bearish pressures that outweigh bulls. Expect a drop back towards $1.65-$1.60 in the best-case scenario or towards $1.20 at the low of 2022 should global markets perform a knee-jerk reaction and switch back to risk-off this afternoon.
XTZ traders could be in for a cold shower
Tezos price dropped roughly 5% in just two trading days as investors got rattled by the disappointing earnings from Coinbase overnight. Next on the docket this afternoon are the US inflation numbers which will be key for the rest of the week. With this tail risk at hand, investors do not look eager to stay in their XTZ long positions and are pulling out before the print. Should the CPI number be a small decline or another jump, expect to see massive dollar strength across the board with cryptocurrencies collapsing.
XTZ price has two scenarios on the table where losses can be limited towards $1.65 - $1.60, where the monthly pivot or the 55-day Simple Moving Average (SMA) will provide support and limit any losses to around 10%. The worst-case scenario would be a break below the 55-day SMA, which puts Tezos price action at risk of collapsing back towards $1.20, the low of June 18, 2022, and the low of 2022 overall. Traders would stand to lose 30% in that falling knife price action and see their efforts in this crypto summer being put back to square one.
XTZ/USD Daily chart
The best case would be that the rejection from Monday against the monthly R1 resistance level was just a fade. An additional catalyst could come as well from the US CPI numbers if there should be a downside surprise, indicating that the Fed could start slowing down their aggressive rate hike path, opening up the possibility of a goldilocks scenario and a dovish hiking cycle. More cash could then come in and see more buying action, with XTZ price quickly back at $1.95 and piercing through to head to $2.00.
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