Spark price rebounds—but is it a dead cat bounce?

On July 25, the price of Spark (SPK) experienced a significant recovery as inventory levels of its tokens on exchanges fell steeply, total value locked (TVL) soared, and the integration with THENA was finalized.

The price of Spark (SPK) surged by over 15% on Friday, hitting an intraday high of $0.1335. This price rally brought its market capitalization close to $130 million.

Spark Experiences Price Surge Amid Decreasing Exchange Reserves

On Friday, the SPK token recorded a notable increase as third-party analytics indicated that token supply on exchanges continued to dwindle—a signal that investors are holding onto their assets rather than selling them. Currently, there are only 382 million tokens available on exchanges, down from 613 million earlier in the week.

Further insights reveal that major investors have been steadily accumulating the Spark token. Their holdings now exceed 9.97 billion tokens, a substantial rise from the week’s low of 9.77 billion.

Moreover, an increasing number of Spark holders are moving their tokens to staking pools, with over 136 million tokens staked by more than 3,400 users—a figure that continues to grow daily.

This ongoing accumulation is likely driven by strong fundamentals, as Spark emerges as a key player in the decentralized finance (DeFi) sector. According to DeFi Llama, the total value locked in Spark exceeded $7.93 billion, marking a remarkable 26% increase over the past month.

The growth trajectory of Spark’s ecosystem remains robust. The assets held by the Spark Liquidity Layer climbed by $126 million to reach $4.4 billion, with the total value locked in savings and lending standing at $2.36 billion and $4.46 billion, respectively.

With the recent listing on THENA, the third-largest decentralized exchange on the BNB Chain, prospects for continued growth look promising for Spark.

However, investors should approach the current rebound with caution. There’s a potential risk that the recent price increase could be a dead cat bounce—a temporary rise after a sharp decline, before resuming the downward trend.

Analyzing SPK Price Trends

In examining the four-hour price chart, SPK peaked at $0.1898 on July 23 before plummeting by 52% to a low of $0.09052 by Thursday. This steep decline is attributed to the broader crypto market downturn and profit-taking following a staggering rise of over 500% in just a few days.

The token dropped to a low of $0.09075, aligning with the 61.8% Fibonacci Retracement level—a crucial point often associated with potential reversals. This price drop coincided with the formation of a hammer candlestick pattern, indicative of a potential bullish reversal.

Given the current trends, the most likely trajectory for Spark is a continuation of its rebound toward the prior peak of $0.1898. However, a fall beneath the hammer’s lower edge would signal a potential dead cat bounce, inviting further downward pressure.