Spark price rebounds—but is it a dead cat bounce?

Spark’s price rebounded on Friday, July 25, as the supply of its tokens on exchanges plummeted, its total value locked increased, and following its integration with THENA. 

The Spark (SPK) token price jumped by over 15%, reaching an intraday high of $0.1335. This rebound brought its market capitalization to nearly $130 million.

Spark rebounds as exchange balances fall

The SPK token jumped on Friday as third-party data showed that exchange reserves continued their downward trend, a sign that investors are not dumping it. There are now 382 million tokens on exchanges, down from 613 million on Monday.

Additional data indicates that top investors have continued to accumulate the Spark token. They now hold over 9.97 billion tokens, much higher than this week’s low of 9.77 billion. 

Further, more Spark holders are moving their tokens to their staking pools. Over 136 million tokens by over 3,400 users have been staked it, a figure that is growing by the day.

The ongoing accumulation is likely due to its fundamentals, as Spark is one of the biggest players in decentralized finance. According to DeFi Llama, the total value locked is over $7.93 billion, representing a 26% increase in the last 30 days. 

All parts of its business are growing. The Spark Liquidity Layer’s assets jumped by $126 million to $4.4 billion, while its savings and lending total value locked stood at $2.36 billion and $4.46 billion, respectively. 

This growth could continue after the company is listed on THENA, the third-largest decentralized exchange on the BNB Chain.

Still, there is a risk that the ongoing Spark crypto price rebound is a dead cat bounce. A DCB is a situation where an asset in a freefall bounces back temporarily as investors buy the dip, only to resume the downtrend. 

SPK price technical analysis

The four-hour chart shows that the SPK price peaked at $0.1898 on July 23 and then plunged by 52% to a low of $0.09052 on Thursday. This decline was likely due to the ongoing crypto crash and profit-taking after the asset jumped by over 500% within a few days.

Spark token dropped to a low of $0.09075, which was along the 61.8% Fibonacci Retracement level. This retracement point is also known as the golden ratio, as it is where most rebounds typically occur. 

Spark price also rebounded after forming the hammer candlestick, which is made up of a small body and a long lower shadow. A hammer is one of the most popular bullish reversal patterns. 

Therefore, the most likely scenario is where Spark continues its rebound and reaches the all-time high of $0.1898. A drop below the lower side of the hammer will confirm that this is a dead-cat bounce and lead to further downside.