Fantom Foundation’s Sonic Testnet Goes Live: How Did FTM React?

Fantom Foundation announced the official launch of the Sonic Testnet, aimed at improving smart contract execution on the DeFi platform. The development of the Sonic Testnet is dedicated to three things.

First, Fantom noted that the upgrade will come with a Fantom Virtual Machine which would be much more efficient than the popular Ethereum Virtual Machine (EMV). Other functions of the Sonic Testnet include cost reduction for validators, 90% storage reduction for data structures, and access to an optimized transaction pool.

Before the announcement, the Fantom (FTM) community was hyped up that the disclosure would result in a favorable outcome for the price action. But in the last 24 hours, FTM’s value hovered around $0.22. This was in contrast to the token’s seven-day performance which was a 29% increase.

Fantom 7-Day Price Performance (Source: CoinMarketCap)

Interest in FTM Surges Nonetheless

According to the FTM/USD 4-hour chart, FTM’s price fell sharply from $0.23 moments after the Sonic Testnet was announced. The plunge seemed like a “buy the rumor, sell the news” scenario, especially as buying pressure has been evident since FTM exchanged hands at $0.17.

Meanwhile, it seems bulls have made use of the price decrease to accumulate more FTM as seen by the rising price action. Furthermore, the Chaikin Money Flow (CMF) was 0.05 at press time. Although the CMF had decreased, the positive reading could indicate that buying pressure was still very present. If the indicator resists falling below the zero midpoint, then FTM may hit $0.24. However, the hike would depend on the reading of the Relative Strength Index (RSI).

At press time, the RSI was 64.05. The RSI reading could signal the waning strength of buyers in the market. Also, the decline may be connected to the overbought level the indicator initially hit at 81.30.

Should the RSI drop below 60, FTM may drop to $0.20. However, a renewed buying pressure could align with the projection above to reach $0.24.

FTM/USD 4-Hour Chart (Source: TradingView)

Despite the stalemate displayed by FTM, traders are hopeful that they could profit from the price movement. This inference was derived from the rising open interest. An increasing open interest could have high liquidity around a cryptocurrency. On the other hand, a decreasing open interest means fewer interactions with contracts related to a token. Hence, the hike in the indicator means traders are convinced that FTM’s price was one to look out for in expectation of profits.

FTM Open Interest (Source: Coinglass)

In conclusion, the Fantom Foundation mentioned that the Sonic Tesnet will remain open to users till the year ends. For the Mainnet, it is scheduled for spring 2024.