Internet Computer delivered one of the strongest performances in the crypto market on Thursday, surging nearly 34% as a sharp drop in exchange balances and a major tokenomics proposal fueled bullish sentiment.
The rally has pushed ICP into technical territory that traders are watching closely, with a massive bullish flag forming on the weekly chart and on-chain data pointing to a developing supply shock.
ICP rallies as inflation overhaul boosts sentiment
ICP climbed to an intraday high of $4.78 during Asian trading hours before stabilizing near $4.66. The move extended weekly gains to roughly 45% and lifted year-to-date performance to nearly 79%.
Beyond the broader market rebound supported by Bitcoin’s recovery, the primary catalyst came from a newly released whitepaper by the DFINITY Foundation, the nonprofit organization behind Internet Computer’s development.
The proposal, known as Mission 70, outlines a plan to reduce ICP inflation by at least 70% by the end of the year. According to the paper, around 44% of the reduction would come from supply-side changes, including cuts to voting rewards and node incentives.
The remaining 26% would be driven by increased network activity, with a focus on AI-powered on-chain cloud engines and autonomous agents. If successful, the changes could materially improve ICP’s long-term supply dynamics and strengthen confidence among investors and developers.
Exchange balances plunge as whales accumulate
At the same time, on-chain data suggests selling pressure is rapidly declining. Data from Nansen shows that the total amount of ICP held on exchanges dropped by roughly 63% in the past 24 hours.
Such a sharp decline typically signals that both whales and retail holders are moving tokens off exchanges, either into self-custody wallets or into long-term staking neurons. This behavior reduces immediately available supply and can amplify price moves if demand remains strong.
With fewer tokens sitting on exchanges, even modest buying pressure can have an outsized impact on price, reinforcing the bullish setup currently forming on higher timeframes.
Bullish flag takes shape on weekly chart
From a technical perspective, ICP is flashing a textbook continuation pattern. On the weekly chart, price action has been carving out a large bullish flag, a structure that often appears after a strong impulsive move followed by a period of consolidation.
Historically, confirmed bullish flags tend to resolve with a breakout that mirrors the length of the initial flagpole. For ICP, this suggests meaningful upside potential if resistance levels are cleared.
The next major level traders are watching sits around $7.50, which has acted as a key resistance zone. A decisive breakout above this area would likely confirm the pattern and could open the door for a move toward $10 or higher if bullish momentum persists.
Momentum indicators support the bullish case. The Supertrend indicator remains green, while the MACD has printed a bullish crossover, signaling that buyers still have control of the broader trend.
Can ICP break out?
With inflation set to fall, exchange supply shrinking rapidly, and a multi-year bullish flag nearing resolution, Internet Computer is approaching a critical technical and fundamental inflection point.
A sustained breakout above resistance could mark the beginning of a larger trend reversal for ICP. However, failure to clear key levels may result in continued consolidation as the market digests recent gains.
As always, traders are watching volume, momentum, and follow-through closely to determine whether this setup turns into a full-scale breakout or stalls below resistance.
