Yearn Finance Risks Strong Pullback After YFI Price Gained 100%

Yearn Finance risks strong pullback after the price of YFI gained 100% in three weeks as we can see more in today’s altcoin latest news.

The recent bout of buying in the Yearn Finance market accompanies volumes, suggesting that there are not enough buyers that back YFI’s price rally. Yearn Finance looks poised for a new price correction after rising five days in a row and hitting $42,000. An absence of buying volume coupled with overbought risks is behind the bearish outlook. The YFI price surged by 47% in five days to $41,970 as the traders shifted capital out of the top cap cryptos like BTC and Ether and looked for short-term opportunities on the altcoin market.

📊 #DeFi assets are showing some nice signs of growth to kick off 2022. $YFI, $UNI, and $AAVE are all ticking up nicely thus far with the first Monday of the year looking #bullish for several #altcoins. https://t.co/8ujolCvt5z pic.twitter.com/ASpf1dUbtn

— Santiment Intelligence (@SantimentData) January 3, 2022

Yearn Finance risks strong pullback now that the YFI price surged, despite being among the beneficiary of the capital migration given its value against BTC increased by 47%. In the meantime, at the core of traders’ sudden buying interest in the YFI markets was the token buyback program. The team announced that it had purchased more than $7.5 million worth of tokens from the open market at a price of $26,651 per unit and revealed that $45 million extra cash in the treasury will use to continue its YFI buyback spree.

Yearn Finance’s community proposed that the YFI treasury direct a chunk of the token buyback to reward YFI holders that participate in Yearn Governance and the proposal is now in the voting phase. YFI’s price surged by more than 100% against the US dollar after the token buyback announcement.
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The trading volume fell despite the rally which only suggests the low conviction among the traders in the upward movement. The bearish divergence between price and volume leads to correction or consolidation until the conviction increases. As a result, the chances of YFI pausing the ongoing price rally is high, with the daily relative strength index entering its overbought zone above the 70 sell signal.

The Yearn Finance token latest price rally brought it closer to the inflection zone near $40,000 as shown via the Fibonacci retracement graph. The 0.618 Fib line close to $40,113 was limiting the YFI upside intraday attempts. The same level was instrumental in stopping the token rally between October and November which led the price to a 12-month low of $17,000. If the bulls manage to push the YFI price above the 0.618 lines, they could take the token out of the multi-month range defined by the $25,500 support. YFI’s next upside target could move towards the 0.5 Fib around $51,000.