ONDO has finally broken its consolidation phase after more than two months. The token breached the range around $0.26–$0.30 that it has been restricted to after the passage of the CLARITY Act just a couple of days ago. Although the community thinks that ONDO is just a real-world asset tokenization platform, the data tells a different story.
ONDO crosses the psychological level–-200-day MA
ONDO ended its extended period of consolidation of over 2 months when it broke above $0.30 and reached $0.45 with the passage of the CLARITY Act. With hype, the token reached above $0.45, breaching the 200-day moving average. The 200-day moving average is one of the most widely watched indicators in financial markets because it often acts as a dividing line between long-term bullish and bearish sentiment.
The movement of a token below the 200-day MA implies to the markets that the fundamentals are weak, while above it would mean the shift in momentum to the buyers. The move above this line shows that bulls are finally able to gain the upper hand against an area that had acted as a strong resistance point. Being able to break out above this important line boosts confidence and draws more interest from buyers as many consider it as the confirmation of the broader trend change rather than a short-lived rally. In spite of breaking above this line, ONDO wasn’t able to hold on to its position for a long period.
ONDO loses its ground above the 200-day MA
This happens mainly in case of a strong breakout rally that is causing prices to rise due to speculative and momentum factors and not due to underlying demand for the security. Those who had entered at levels below that might be viewing the breakout rally as an opportunity to cash out on their investments.
In the meantime, it is likely that many market participants were wary around the 200-day moving average because of its technical significance. In the case of short-term traders, there may be instances where they chose to exit their trade at the resistance point without the need to wait for a bigger trend.
With weakening momentum, bulls lost steam, and without any additional buying interest, sellers were able to bring the price below the level. Such an approach indicates that despite the positive sentiment witnessed during the breakout, the market was still lacking conviction for further price moves to the upside.
As shown in the daily chart above, ONDO is currently forming the cup and handle pattern. It has completed the cup and now it’s forming the handle. The cup and handle formation refers to the technical analysis pattern formed by prices. This pattern resembles the look of a cup with a handle. The formation consists of a rounded cup shape, which ends up with a small pullback, after which there is a breakout move. The pattern occurs in an uptrend and indicates a moment when the market takes a breather and prepares to continue its bullish move.
The cup and handle pattern
On the left-hand side of the cup, there is an initial drop in prices as the traders begin booking their gains following a rally phase in the market. During this time, bearish sentiments are likely to prevail in the short term.
When the market moves towards the base of the cup, trader behavior will be different. The selling pressure will ease off as the weak hands will exit the market. At this point, large players and investors may start buying stocks quietly.
When the cup’s right side comes into view, the confidence of the market will return as buyers begin to enter the market again. The prices will start rising and move up to meet the former resistance level. Traders who had remained on the sidelines will begin trading again upon observing the strength of the market momentum.
From a psychological perspective, the cup and handle formation marks a complete sequence of market emotions. During the falling stage, fear is dominant; uncertainty sets in at the bottom; confidence prevails during the rising phase; and hesitance is evident in the handle stage, while optimism builds up during the breakout period. This progression in the psychology of the traders makes it a bullish continuation formation.
ONDO’s price rallies with the passage of the CLARITY act
ONDO breached its consolidation phase with the passage of the CLARITY Act. The CLARITY Act (Digital Asset Market CLARITY Act) is a U.S. crypto market structure bill designed to create clearer rules around how cryptocurrencies and digital assets are regulated. Its main goal is to end years of uncertainty over which assets fall under the authority of the SEC and which belong under the CFTC.
ONDO’s rally is not just hype but real value
ONDO’s price rally should not be mistaken for just hype. In fact, many investors appear to view ONDO purely as a tokenized stocks narrative, assuming its value mainly comes from offering blockchain versions of assets like NVIDIA, Tesla, or the S&P 500. However, the protocol data suggests that tokenized equities are currently a relatively small part of the broader ecosystem.
Contrary to popular belief, the primary generator of value within the protocol has been yield-oriented and institutional offerings. USDY, which represents the yield-bearing dollar offering, is the largest component in terms of value in the protocol, suggesting that investors have been investing for yield rather than tokenized stocks.
Likewise, the backing of OUSG by institutional treasury products from companies like BlackRock and Fidelity indicates that Ondo is developing its infrastructure based on physical assets and institutional money, not just creating stock exposure on the blockchain.