MORPHO has experienced a significant price surge, jumping by 20% on February 28, despite a risk-off sentiment in the broader crypto market. However, technical indicators suggest that a potential correction may be on the horizon for the altcoin.
MORPHO’s Price Rally and Coinbase Listing Impact
MORPHO reached an intraday high of $2.44 on Friday, marking a 35% increase from its weekly low and bringing its market cap close to $500 million. The rally was accompanied by a sharp increase in trading activity, with daily trading volume surpassing $94 million, more than doubling from the previous day.
The surge was largely driven by Coinbase listing MORPHO on both the Ethereum and Base networks. Historically, the “Coinbase Effect” has led to rapid price spikes for newly listed tokens, as seen recently with Popcat (POPCAT), which gained 30% after its Coinbase debut.
Morpho’s Expanding Ecosystem
Founded in 2021, Morpho is a decentralized, noncustodial lending platform on Ethereum, designed to optimize lending pools through direct peer-to-peer interactions. The protocol enhances lending efficiency while maintaining traditional lending pools as a fallback.
Amid its price rally, Morpho’s developers also shared updates on the project’s expansion. The team announced that its smart contracts are now live on multiple blockchains, including Unichain, Mode Network, Hemi, Corn, and Sonic. These contracts have been reviewed by independent auditors and come with a $2.5 million bug bounty for security enhancements.
Potential Correction: Bearish Signals Emerging
Despite the hype and fresh investor interest, traders should remain cautious as several indicators suggest a potential pullback for MORPHO.
- Concentration of Holdings: Data from IntoTheBlock reveals that 95% of MORPHO tokens are held by large investors. With 87% of holders currently in profit, many may choose to sell and lock in gains—especially given the broader bearish trend in the crypto market.
- Market Sentiment: Bitcoin (BTC) recently fell below $80,000, and the Crypto Fear and Greed Index hit a two-year low, increasing the likelihood of a sell-off in risk assets like MORPHO.
- Technical Indicators: On the 1-day MORPHO/USDT chart, MORPHO is trading below the 50-day moving average, indicating bearish dominance. Additionally, the Supertrend indicator remains red and above MORPHO’s price, further reinforcing a potential downward move.
- Key Support Levels: Although MORPHO is still above the descending trendline that has been forming since January 17, a drop below $2 could trigger a bearish reversal, potentially sending the token toward its February 8 low of $1.75.
What’s Next for MORPHO?
While MORPHO’s rally has been impressive, its sustainability depends on broader market conditions. If market sentiment improves and Bitcoin rebounds, MORPHO could invalidate the bearish setup and continue its uptrend. However, if profit-taking accelerates, traders may see a deeper correction in the coming days.
At press time, MORPHO had already lost some of its daily gains, trading at $2.26 per coin.
