- MAGIC, Optimism and Stargate Finance have rallied beyond 20% after the US Federal Reserve’s policy meeting on Wednesday.
- While MAGIC and Optimism are entering price discovery phases, STG has a long way to go.
- The rallies, while impressive for all three altcoins, are facing crucial hurdles and could trigger a correction.
Optimism (OP), MAGIC (MAGIC) and Stargate Finance (STG) are the top gainers in the last 24 hours. The rally of these altcoins can be attributed to the volatility generated by the interest rate decision and the Fed’s policy meeting that took place on Wednesday.
The US Federal Reserve Chairman Jerome Powell’s speech mentioned that the rates are going to stay high, and their inflation target is 2%. Despite the 25 bps rate hike, the hawkish tone from Powell is good for US Dollar and is likely to trigger a sell-off for risk-on assets like Bitcoin and stocks.
Therefore, market participants need to be cautious with this musical chair rally as it could end soon, leaving investors holding the altcoin bags or worse, getting margin called.
Also read: Fed remains hawkish with 25 bps hike, how will Bitcoin price react?
Can altcoins keep their gains?
MAGIC has the highest gains of 37% among the three altcoins. Stargate Finance comes in second at 34% and Optimism at 28%. While the returns on these altcoins are impressive, investors need to be cautious as Bitcoin, the largest cryptocurrency by market capitalization is showing cracks in its armor.
Let’s take a look at MAGIC altcoin and what to expect from its price action.
MAGIC price hit an all-time high of $1.787 as of February 2, but the 29% daily candlestick that precedes it is an impressive move. Using the trend-based Fibonacci extension tool, investors can note that the next hurdle is around $1.90, which is the 100% Fibonacci extension level.
Depending on the February 2 daily candlestick close, investors can decide if they want to hop on a long position or short.
MAGIC/USDT 1-day
If the current candlestick develops into a doji, the likelihood of a reversal becomes high. In such a case, MAGIC could retrace to the 50% Fibonacci retracement level at $1.57.
Stargate Finance price hit a peak of 34% after the FOMC meeting. In doing so, STG tagged the state trend resistance level at $0.800. If there is a massive rejection, causing a small body for a daily candlestick or if it flips into a down candlestick, it is indicative of profit-taking. In such a case, Stargate Finance could witness a 15% drawdown, pushing it down to $0.658.
STG/USDT 1-day chart
On the other hand, if $0.800 is flipped into a support floor, the next hurdle for STG is 14% away at $0.914.
Optimism price has hit an all-time high of $2.81, but the daily candlestick has already flipped red, denoting a spike in selling pressure. Continued profit-taking will result in an 11% downswing to $2.38, which is the 50% Fibonacci retracement level.
OP/USDT 1-day chart
Although unlikely, a sustained buying pressure that flips the $2.81 hurdle into a support floor could see OP price tag the 127.2% Fibonacci extension level at $3.10, marking another all-time high.