Artificial Superintelligence Alliance (FET) has faced significant downward pressure in recent weeks, dropping 14% over the past two weeks and struggling to break out of a well-defined descending channel. At the time of writing, FET is trading at $1.18, continuing to encounter resistance at $1.34—the upper boundary of its current trend channel. Despite this bearish technical posture, emerging on-chain data and whale activity suggest a potential shift in market dynamics that could pave the way for a bullish reversal.
While technical indicators like the Relative Strength Index (RSI) and Average Directional Index (ADX) point to sustained selling pressure, deeper chain-based metrics tell a more nuanced story. A closer look reveals signs of weakening sell-side dominance and growing accumulation behavior—key precursors to potential price recovery.
Current Market Sentiment and Technical Outlook
FET’s price action remains confined within a descending parallel channel, failing to generate enough momentum for an upside breakout. The persistent rejection at $1.34 highlights limited buying interest at higher levels. With resistance overhead and no clear catalyst for acceleration, short-term sentiment remains cautious.
The RSI currently sits at 37, indicating oversold conditions but not yet signaling a reversal. More concerning is the pattern of lower lows in RSI, reflecting intensifying bearish momentum. Meanwhile, the rising ADX confirms the strength of the current downtrend, suggesting it may persist unless demand significantly increases.
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However, technical analysis alone doesn’t capture the full picture. On-chain fundamentals are beginning to diverge from price performance, hinting at a possible decoupling between market sentiment and underlying supply dynamics.
Declining Exchange Reserves Signal Reduced Selling Pressure
One of the most telling signs of a potential turnaround is the recent drop in FET’s exchange reserves. According to data from CryptoQuant, FET holdings on exchanges have declined sharply—from 502 million tokens to a weekly low of 497 million over just four days.
This reduction is significant because exchange balances act as a proxy for sell-side liquidity. When tokens move off exchanges, they’re typically being transferred to private wallets or long-term storage, reducing immediate selling pressure. A consistent decline suggests that holders are taking their tokens out of trading circulation, often a precursor to accumulation.
Moreover, this drawdown may indicate that weaker hands—investors prone to panic selling—have already exited during the recent dip. With fewer liquid tokens available for sale, any new wave of buying demand could trigger a sharper price response due to reduced supply.
Surge in Whale Activity Hints at Accumulation
Alongside declining exchange reserves, whale activity around FET has surged dramatically. Data from IntoTheBlock shows that large transactions (transfers exceeding $100,000 in value) spiked from 4.63 million to 7.56 million within a 24-hour window.
This sudden increase in high-value transactions suggests heightened interest from major players. Given that whales control approximately 63% of FET’s circulating supply, their behavior can heavily influence price direction.
While large transactions can represent either buying or selling, the combination of rising whale movement and falling exchange reserves leans toward net accumulation. If whales are purchasing and moving tokens off exchanges, it strengthens the case for a supply squeeze in the near term.
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Such dynamics have historically preceded bullish reversals in other assets, where smart money accumulates before retail sentiment catches up.
Mixed Signals from Derivatives Market
Despite growing optimism from on-chain data, derivatives markets paint a more cautious picture. While long positions still outnumber short positions—indicating that more traders are betting on upside—the overall sentiment isn’t strongly bullish.
Funding rates remain positive, meaning longs pay shorts to maintain leveraged positions. However, open interest has dropped by 5%, signaling weakening demand for new long entries. This divergence suggests that while existing bulls are holding firm, there’s limited appetite for fresh commitments.
A declining open interest amid positive funding rates often reflects fading conviction. Traders may be holding on due to hope rather than conviction, which can lead to rapid liquidations if downward momentum resumes.
For a sustainable reversal to take hold, we’d need to see not only continued accumulation but also rising open interest and renewed inflow into long positions—signs of strong new demand.
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Frequently Asked Questions (FAQ)
Q: Is FET likely to reverse its downtrend soon?
A: While FET remains technically bearish, declining exchange reserves and rising whale activity suggest growing accumulation. If these trends continue, a reversal could occur once buying pressure outweighs selling momentum.
Q: What does falling exchange reserve mean for FET?
A: A drop in exchange holdings reduces available sell-side supply. This often precedes price increases because fewer tokens are readily available for sale when demand picks up.
Q: How do whale transactions affect FET’s price?
A: Whales control a large portion of FET’s supply. Their buying activity can absorb sell orders and push prices higher, while coordinated selling can accelerate declines. Recent spikes suggest active positioning.
Q: Why is open interest decreasing despite more longs than shorts?
A: It indicates that although long positions dominate, traders aren’t opening new leveraged bets. This reflects weak conviction and could limit upward momentum unless new capital enters.
Q: What price level would confirm a bullish breakout for FET?
A: A decisive close above $1.34—the upper trendline of the current channel—would signal breakout potential. Volume confirmation would further validate the move.
Q: Can on-chain data predict FET’s next move accurately?
A: On-chain metrics don’t guarantee price moves but provide valuable context about supply distribution and investor behavior. Combined with technicals, they enhance forecasting accuracy.
Final Outlook
FET is at a critical juncture. While short-term technicals remain bearish, fundamental shifts in supply distribution—evidenced by shrinking exchange reserves and surging whale transactions—suggest that smart money may be positioning for a rebound.
For a full bullish reversal to materialize, three conditions should align: sustained off-exchange accumulation, rising open interest in futures markets, and a breakout above $1.34 with strong volume support.
Until then, traders should monitor both on-chain flows and derivatives trends closely. The current setup reflects a classic accumulation phase—one that often precedes significant price moves when broader market conditions improve.
With growing signs of institutional-grade accumulation and weakening retail sell pressure, FET could be laying the groundwork for a comeback in the months ahead—making it one to watch closely in the AI-themed crypto sector.