Here’s why HedgeTrade (HEDG), The Graph (GRT) and UMA are rallying

Bitcoin (BTC) has been consolidating for the past few days as the bulls and the bears battle it out for control over the largest cryptocurrency by market capitalization.

Currently, Bitcoin looks like it is steadily losing its upward momentum but Vailshire Capital Management founder and CEO Jeff Ross has maintained his bullish stance and believes the uncertainty will resolve to the upside. 

While Bitcoin consolidated, the action shifted to Ether (ETH), which made a new all-time high, eclipsing its 2018 high at $1,428. This suggests that the crypto markets remain in a firm bull grip.

The rally from the leaders is usually followed by strong breakouts from tokens that are likely to benefit in the current environment or have come up with positive developments that have caught trader’s attention.

Let’s inspect the possible fundamental and technical reasons for the rally in the three tokens selected today.

HEDG/USD

The crypto bull run has been in place for the past few weeks and this trending move offers a great opportunity for traders to make a quick buck. While initially the rally was mostly oriented around Bitcoin, it has broadened in the past few days with several altcoins joining the party.

In such an environment, experienced traders maximize their gains but less sophisticated investors with limited capital are not fully able to take advantage of the bullish trend. This is where Hedge Trade (HEDG) comes in as it's designed to allow novice traders to mirror the activity of professional investors.

HEDG had been in a strong downtrend for the past few months, but it surged from $0.365 on Jan. 13 to an intraday high at $2.40 on Jan. 14, a 557% rally within two days.

After such a massive rally in a short span, profit-booking was to be expected, however, the HEDG/USD pair is currently finding buying support close to the 61.8% Fibonacci retracement level at $1.14237.

The long tail on the Jan. 18 and Jan. 19 candlesticks suggest that there is strong buying at lower levels. If the bulls can push the price above $2, the next leg of the up-move with a target at $3.43 could begin.

The upsloping moving 20-day exponential moving average ($1.045) and the relative strength index (RSI) near the overbought zone suggest bulls have the upper hand.

This positive view will be invalidated if the price turns down and breaks below the 20-day EMA. Such a move will suggest that the recent rally was a possible pump and dump scheme.

GRT/USD

If the current bull market continues and cryptocurrency adoption furthers, the need for a decentralized protocol for indexing and querying large amounts of blockchain data will increase. 

Since June, the number of queries on The Graph network increased from 1 billion to about 10 billion in November, a ten-fold increase. The Graph believes this growth is likely to increase further, hence the company is on a hiring spree.

The company's growing popularity has als attracted several teams and individuals to join the network as indexers, curators, and delegators. Within 19 days of its mainnet launch, $1 billion GRT was staked, indicating that there is strong demand for the token.

While the fundamental developments are bullish and point to possible sustained growth, do the technicals also signal that there is strength?

GRT rallied from an intraday low at $0.2333 on Jan. 12 to an intraday high at $0.6642 on Jan. 18, a 184% rally in a week. However, the bears are unwilling to give up as they are currently attempting to defend the $0.6545 overhead resistance.

If the bulls do not allow the price to dip below the 38.2% Fibonacci retracement at $0.4996, it will suggest that traders are accumulating on dips.

A strong rebound off this level could form the handle of a possible cup and handle formation, which will complete on a breakout and close above $0.6545. This setup has a target objective of $1.0757. However, a straight dash to the pattern target is unlikely as the bears will try to aggressively defend the $0.7858 resistance.

This positive view will be invalidated if the pair dips and sustains below the 50% retracement level at $0.4488. If that happens, the pair may remain range-bound for a few more days.

UMA/USD

Universal Market Access (UMA) allows users to create priceless synthetic assets on Ethereum blockchain. Instead of limiting itself to traditional financial instruments, the protocol is expanding its reach and building the optimistic oracle, which may be used for insurance, betting, and prediction markets.

Another interesting development in the pipeline is a perpetual contract that supports synthetic assets without any expiry and are executed pricelessly.

UMA formed a partnership with YAM Finance in early December of 2020 and the team transferred the management of uGAS to YAM. The new team launched Degenerative Finance and offered a synthetic futures contract based on the 30-day median gas fees.

The timing of the launch was perfect because Ethereum gas prices surged in January and the futures would have given an opportunity to traders to hedge their fees or just trade it.

As part of UMA’s dapp mining initiative, OpenDAO built a new interface for the Yield Dollar, a precursor to the development of USDO stablecoin, which is proposed to be backed by several assets that could be from crypto, stocks, or even real estate.

The protocol is opening a world of opportunities to developers and traders. Let’s see how UMA token has been responding to these developments and whether there are any investing possibilities.

UMA rallied from $7.87 on Jan. 13 to an intraday high at $12.80 on Jan.19, a 62% rally in a week. The bears are currently attempting to stall the rally at the overhead resistance near $13.222.

However, a positive sign is that the bulls are not giving up much ground, which shows that traders are not hurrying to book profits after the recent rally. The upsloping 20-day EMA ($9.51) and the RSI in the overbought territory suggest that bulls are in control.

If the bulls can propel the price above $13.222, the UMA/USD pair could start a new uptrend that could reach $16.30 and then $19. The momentum could pick up further if the bulls can push the price above $20.315.

On the contrary, if the pair turns down from the current levels or the overhead resistance and breaks below $10, it will suggest a lack of demand at higher levels.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.