5.4 min read
Why did TWT price soar 150% in six days following FTX collapse?
Written byKevin Lopez
November 15, 2022
- Trust Wallet Token (TWT) has risen nearly 150% over the past six days, bucking a downturn in the cryptocurrency market that saw its net capital plummet by nearly $100 billion over the same period.
- After the FTX fiasco, Trust Wallet likely became an outlet for traders to withdraw funds from cryptocurrency exchanges, and TWT prices soared.
- From a technical standpoint, TWT is at risk of a sharp price correction in the days before the end of the year.
The gathering rate of TWT whales is accelerating
TWT’s price hit an intraday high of $2.43 on Nov. 15, a day after hitting an all-time high of nearly $2.75. At its nadir in 2022, the token changed hands at $0.40, making it one of the best-performing assets this year, with a year-to-date gain of more than 225%.
The Trust Wallet token’s uptrend gained momentum in November following the collapse of Sam Bankman-Fried’s FTX, causing traders to massively withdraw funds from exchanges, leading to bank runs.
For example, in the week ending November 13, the total number of bitcoins in FTX wallets dropped to zero. Likewise, the exchange’s Ether reserves fell from 611,000 to just 2,800 during the same period.
The distrust of centralized exchanges seems to have fueled the need for self-hosted wallets. Binance CEO Changpeng Zhao’s endorsement of the token’s parent platform, Trust Wallet, also played an important role in pushing up the price of TWT.
Additionally, the supply rate of Trust Wallet tokens held by addresses with balances between 1,000 TWT and 10 million TWT increased sharply during the six-day price uptrend, indicating an accumulation of whales.
At the same time, the token’s trading volume increased from 279 million TWT in the same period to 593.25 TWT, showing the market’s confidence in its bullish trend.
TWT serves as a utility token for the Trust Wallet, where traders can buy, sell and collect non-fungible tokens (NFTs), as well as trade and invest in cryptocurrencies. Therefore, TWT usually acts as a centralized exchange token, while Trust Wallet allows users to control their own funds.
Therefore, after the FTX fiasco, Trust Wallet likely became an outlet for traders to withdraw funds from cryptocurrency exchanges, and TWT prices soared.
'Not your keys, not your #crypto' has been resonating around the Twitter space over these past few days.— Trust - Crypto Wallet (@TrustWallet) November 11, 2022
While many people utilise centralised exchanges, a lot of users are yet to harness the power of self custody.
Start taking control, today👇 https://t.co/h3pVVNzgpL
The "overbought" risk of Trust Wallet Tokens
From a technical standpoint, TWT is at risk of a sharp price correction in the days before the end of the year.
At least two indicators point to this bearish outlook. First, TWT's weekly Relative Strength Index (RSI) has become the most "overbought" level since February 2021, indicating an imminent period of price consolidation or correction.
Second, TWT is showing signs of drying up after encountering an ascending trendline resistance that limits the token’s 2021 upside attempts.
In the past, pullbacks from the aforementioned resistance line have repeatedly pushed TWT towards multi-month rising trendline support. By 2022, this rising level coincides with another horizontal support line at $0.878, representing a 60% decline from today’s price levels.
On the upside, TWT has broken a multi-month horizontal trendline resistance near $1.535 as support for its continued price rise, which may help limit its bearish outlook. However, if the TWT price rebounds decisively from $1.535, it could reach a new all-time high by late 2022 or early 2023.
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