The IOTA (IOTA) token has been on a downward spiral in recent weeks, mirroring a trend across the cryptocurrency market.
After reaching a high of $0.4205 in March, IOTA has plunged over 46%, hitting a low of $0.2242 – its weakest point since early March. This slump coincides with concerning developments within the IOTA ecosystem and broader market anxieties.
ShimmerEVM’s Struggles Dampen IOTA Sentiment
A significant factor behind IOTA’s price decline is the underwhelming performance of ShimmerEVM, its Ethereum Virtual Machine (EVM) compatible layer-2 network. ShimmerEVM serves as a testing ground for applications before deployment on the main IOTA network, similar to Kusama for Polkadot. However, data from DeFi Llama paints a bleak picture, with the Total Value Locked (TVL) in the ShimmerEVM ecosystem plummeting from a peak of nearly $14 million in 2023 to a meager $3.68 million currently.
MagicSea, the dominant decentralized application (dApp) within ShimmerEVM, holds over $2.3 million in assets, but other top dApps like Deepr Finance, Accumulator, and Iotabee languish with significantly lower TVLs. This lackluster ecosystem performance casts a shadow over IOTA’s future prospects.
The impending Bitcoin halving, scheduled for the coming days, initially fueled a surge in anticipation across the cryptocurrency market, with IOTA included. Halving events typically reduce the number of new Bitcoins generated by mining by 50%, historically leading to price increases. However, as the event draws closer, the market seems to have already priced in this potential boost, leading to a correction.
Also Read: DeFi Revolution: IOTA’s APAC Accelerator Bridging the Gap Between TradFi and DeFi with Tokenization
Macroeconomic Concerns Add to the Downturn
Adding to the pressure on IOTA is the prevailing fear gripping traditional financial markets. The Dow Jones, Nasdaq 100, and S&P 500 indices have all witnessed significant downward trends recently. This risk aversion stems from anxieties surrounding the Federal Reserve’s hawkish stance on interest rates to combat persistent inflation in the United States.
Examining IOTA’s daily chart reveals a stark decline. The token has not only breached the 50-day and 200-day exponential moving averages (EMAs) but has also formed a bearish pennant pattern. Additionally, it has dipped into the “Weak, Stop & Reverse” zone of the Murrey Math Lines, a technical indicator suggesting a potential price reversal.
Where to Next?
Given these technical indicators and the broader market sentiment, the short-term outlook for IOTA appears bleak. The next crucial support level to watch is $0.1900. A breach of this level could trigger a further plunge to $0.1347, its lowest point since mid-August 2023.
The confluence of a struggling ecosystem, fading halving hype, and broader market jitters has sent IOTA’s price plummeting. Only time will tell if the token can recover and regain its lost ground.
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