Decred (DCR) prices soared as much as 45% on April 18 before paring some gains as traders bet on a major hard fork that aims to prevent pump-and-dump schemes by miners.
Key Decred network update in three weeks
DCR rose nearly 45% to over $86 in one day, its highest level in four months. Furthermore, the massive bullish move was accompanied by an equally huge increase in its trading volumes, confirming that most traders supported the intraday bullish momentum.
Traders flocked to buy Decred ahead of a key update scheduled for early May that would reduce the DCR mining reward share to 10% from the current 60%.
The update comes in response to a community vote that agreed to limit Decred’s access to “malicious miners,” those with a history of artificially pumping and dumping DCR.
On the other hand, the community agreed to increase the rewards for Decred proof-of-stake (PoS) validators, entities that validate blocks submitted by miners, from 30% to 80%, suggesting that the consensus wants to move away from proof primarily. . Consensus of Work (PoW) for on-chain governance of PoS.
pow and pos have notable strengths, but we have found that the often overlooked risk of a mining cartel suppressing markets with their inventory is a huge drawback for pow.
the revolution will not be suppressed #decree— Jake Yocom-Piatt (@behindtext) April 14, 2022
In a nutshell, Decred users would be incentivized to lock up their DCR for a certain period, thereby reducing their active market supply, which could drive the price up.
“DCR block reward change is in 20 days” noted Independent market analyst Permabull Nino said that should be the reason for traders to watch the Decred market closely in the coming sessions. Extracts:
“If the price starts to move as staking rewards rise, it could create a reflexively bullish price action/decent wealth effect. As always, barring a BTC drop.”
What do the DCR technicians say?
Decred price corrected by almost 20% shortly after reaching the daily top near $86, a level close to the two key DCR resistance levels: the 200-day EMA; blue wave) around $78 and the 23.6 Fibonacci line near $96.
A decisive break above both price ceilings could see DCR test $125 as its next upside target. However, multiple indicators suggest that its chance of rallying further is limited. That includes a bearish divergence between rising prices and falling DCR momentum (as indicated by its Relative Strength Index).
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Furthermore, the price action of DCR on April 18 looked very similar to the massive bullish moves witnessed since December 2021, each showing the token forming daily candles with large bullish wicks.
None of those price booms led to substantial follow-throughs, suggesting that market participants had simply been pumping and dumping DCR to secure interim gains.
As a result, DCR is now at risk of falling to its immediate support target near the 50 day EMA (the red wave) near $60.
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