Sui (SUI) Faces Market Correction as 'Overbought' Status and Bearish Divergences Emerge

The Sui Network (SUI) has escalated the cryptocurrency market ranks at an impressive speed and price performance amid growing demand. This, however, raised multiple ‘Overbought’ statuses in different time frames, together with bearish divergences that could signal a selling opportunity.

Cryptocurrency Sui (SUI) has rapidly ascended the ranks in the cryptocurrency market, boasting an impressive price performance and high demand. However, this ascent has triggered multiple ‘Overbought’ statuses in various time frames, presenting a potential selling opportunity.

Finbold used CoinGlass's RSI heatmap to gauge the overbought statuses on October 13, revealing Sui as the sole weekly overbought cryptocurrency with an RSI of 72.07. This indicates that most SUI holders are more likely to sell than to continue holding.

Moreover, Sui's RSI marks 73.43, 74.7, 71.65, 73.84, and 72.68 at the 1-hour, 4-hour, 12-hour, 24-hour, and 1-week time frames, respectively.

SUI priceRSI heatmap. Source: CoinGlass

A closer examination of Sui's daily price chart, using TradingView's crypto index, reveals a similar conclusion. The daily RSI stands at 72.07 in this index at $2.21, retracing after reaching a $2.29 all-time high.

Importantly, the chart also presents a bearish divergence starting on September 24, which could herald a reversal from this rally. This divergence emerges as Sui's price makes three subsequent higher highs, whereas the RSI makes three subsequent lower highs.

We also spotted this pattern in the weekly and 4-hour chart against the dollar.

SUI price daily technicals. Source: TradingView

Other technical analysts have also highlighted the potential for a bearish reversal in SUI's price. Notably, a trader on TradingView, pejman_zwin, has used the Elliott Wave theory to predict a reversal.

“Currently, SUI is moving near the Resistance lines and the Potential Reversal Zone. According to the theory of Elliot waves, SUI seems to be completing the main wave 3. (It is completing the microwave 5 of the main wave 3). I expect SUI to rise another 20% or so and then start to correct. SUI correction can be -20% to -40%.”

The trader's prediction of a 20% increase has already occurred, with SUI previously targeting $2.30 per token. If the analysis continues as anticipated, SUI could be poised for a -20% to -40% correction wave four.

Sui Network fundamentals: A double-edged sword

The Sui Network has garnered attention for its robust technology stack and exceptional user experience, leading many crypto investors to hail SUI as the Solana (SOL) killer, which has channeled a strong capital inflow into the project.

Recently, Circle integrated its dollar stablecoin USDC natively on the Sui Network, bringing significant liquidity to the ecosystem. Subsequently, Grayscale announced the Grayscale SUI trust, paving the way for institutional exposure to the token.

However, SUI's tokenomics has raised concerns due to its heavy weighting toward private investors and Mysten Labs. With less than 30% of all already distributed tokens in circulation, Sui has a high fully diluted value (FDV), and the majority of these tokens are being staked while still locked, exacerbating the asymmetry against retail traders and investors.

Finbold reported on October’s $100 million monthly unlock of SUI tokens, highlighting the potential selling pressure at such profit levels. Series A and B investors received the largest unlocked portion, at 61%.

In summary, while Sui's technology, user adoption news, and experience bode well for its long-term bullishness, its tokenomics, coupled with an overbought status and bearish divergences, foreshadow an impending correction and short-term weakness in SUI's price.

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