XCN rallies over 40%—can it sustain these gains moving forward?

XCN, the token of Onyxcoin, has experienced a remarkable rally, surging by over 40% in the past 24 hours to reach an intraday high of $0.033 on February 4. This surge pushed its market capitalization close to $1 billion, extending its impressive monthly gains to more than 1,000%. The rally is largely attributed to the announcement of Onyx’s launch of its own Layer-3 blockchain, the Onyx XCN Ledger, which has sparked a surge in demand and trading activity. Over the past day, XCN’s daily trading volume has increased by 20%, reaching over $434 million, while the open interest in its futures market has jumped by 17%, reaching nearly $21 million.

Key Drivers of XCN’s Rally

The primary catalyst behind XCN’s recent price surge is the unveiling of the Onyx XCN Ledger, a Layer-3 blockchain designed to support financial-grade applications with near-instant confirmations and low transaction fees. The platform is built on Arbitrum Orbit and secured by Coinbase’s Layer-2 chain, Base. XCN will serve as the native gas token for this new blockchain, and the implementation of EIP-1559 will burn tokens with each transaction, decreasing the overall supply of XCN and creating a deflationary effect, which may drive up demand and consequently, its price.

Additionally, demand for XCN has surged ahead of the ledger’s mainnet launch, with a noticeable increase in outflows from centralized exchanges since January 27, according to data from CoinGlass. XCN has also benefited from the broader recovery in the crypto market, which was triggered by Bitcoin’s bounce back to the $100k level after significant liquidations in the market, as well as a market-wide surge following President Donald Trump’s decision to pause tariffs against Mexico and Canada.

Technical Analysis and Price Outlook

On the daily chart, XCN remains well above its 50-day and 200-day moving averages, signaling that the bullish trend is still intact. However, technical indicators are beginning to show signs of potential reversal. The MACD and price oscillator lines are pointing downward, and the Relative Strength Index (RSI) indicates a bearish divergence with the price, suggesting weakening momentum and a possible correction.

Given these signals, XCN could experience a pullback to the psychological support level of $0.025. However, if Bitcoin continues its bullish momentum, it could provide further upward support for XCN and potentially invalidate the bearish scenario.

At the time of writing, XCN is trading at $0.0299 per coin, maintaining a 12.4% increase over the past day. Whether XCN can hold on to its recent gains depends on the continuation of strong demand for its Layer-3 blockchain and the overall sentiment in the broader crypto market. If the market remains bullish, XCN could continue to climb; however, a correction may be in the cards if selling pressure builds up.