Decred (DCR) prices soared by 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 upgrade in three weeks
DCR rallied by nearly 45% to over $86 in one day, its highest level in four months. Moreover, the massive upside move accompanied a similarly huge spike in its trading volumes, confirming that most traders backed the intraday bullish momentum.
Traders flocked to buying Decred ahead of a key upgrade slated 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 "malicious miners" — those with a history of artificially pumping-and-dumping DCR — from accessing Decred.
On the other hand, the community agreed to raise the rewards for Decred's proof-of-stake (PoS) validators — entities that validate blocks submitted by miners — from 30% to 80%, suggesting that consensus wants to switch primarily away from proof-of-work (PoW) consensus to PoS on-chain governance.
pow and pos both have notable strengths, but we have found that the typically-overlooked risk of a mining cartel suppressing markets with its inventory is a massive downside to pow.— Jake Yocom-Piatt (@behindtext) April 14, 2022
the revolution will not be suppressed #Decred
Simply put, Decred users would be incentivized for locking up their DCR for a certain period, thus reducing their active supply from the market, which could bolster price.
"DCR block reward change is in 20 days," noted Permabull Niño, an independent market analyst, saying that it should be the reason for traders to watch the Decred market closely in the coming sessions. Excerpts:
"If price starts moving while staking rewards go up could create a decent wealth effect/reflexively bullish price action. As always, barring a BTC plunge."
What do DCR technicals say?
Decred's price corrected by nearly 20% soon after topping out for the day near $86, a level near DCR's two key resistance levels: the 200-day exponential moving average (200-day EMA; the blue wave) around $78 and the 23.6 Fib line near $96.
A decisive break above the two price ceilings could have DCR test $125 as its next upside target. Nonetheless, multiple indicators suggest that its likelihood of rallying further is limited. That includes a bearish divergence between the DCR's rising prices and falling momentum (as indicated by its relative strength index).
Additionally, the DCR price action on April 18 appeared very similar to massive upside moves witnessed since December 2021 — each showing the token forming daily candles with large bullish wicks.
None of those price booms led to substantial followups, suggesting that market participants had been merely pumping-and-dumping DCR to secure interim profits.
As a result, DCR now risks plunging to its immediate support target near the 50-day EMA (the red wave) near $60.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.