SushiSwap is on fire as on-chain metrics stay strongly bullish

• SushiSwap flies the bullish flag high above the cryptocurrency horizon after trading new record highs.
• Key on-chain metrics support SUSHI’s uptrend with 100% of addresses in profitability.
• SushiSwap may extend the rally to $20 if the price closes the day above the channel’s middle boundary.
• A correction may come into play, especially now that the RSI is in the overbought area.

SushiSwap has managed to rise from a ridiculed token to a darling in the decentralized finance (DeFi) sector and the cryptocurrency market at large. The token is trading at new all-time highs after entering a price discovery mode since November 4. SushiSwap has surged by nearly 2,900% to exchange hands at $15.5.

SushiSwap ‘engines’ fueled by on-chain metrics

SushiSwap’s number of large transactions is up 325% year-to-date (YTD), according to the data provided by IntoTheBlock (ITB). This metric tracks transactions of more than $100,000 on the protocol.

A higher figure or an increase reflects institutional buyers or whales taking a fundamental interest in the project. It also suggests that the project is receiving positive sentiment from the investors and, therefore, points to a possible increase in token value.

SushiSwap number of large transactions

Similarly, we can see a consistent rise in the volume of perpetual swaps across exchanges. ITB shows that this volume stands at $3.9 billion at the time of writing, a figure that is likely to keep rising. It is worth mentioning that the perpetual swap contracts or derivative volume consist of all the dollar amount traded in the last 24 hours across all the top exchanges.

SushiSwap perpetual volume

According to ITB’s Global In/Out of the Money, 100% of SushiSwap addresses are currently profitable. This is reflected by the model below, showing that SUSHI is now in price discovery, and no clear barrier exists to derail the uptrend.

SushiSwap Global In/Out of the Money

Consequently, SushiSwap’s correlation with Bitcoin has significantly diminished in 2021. Currently, the correlation between these two assets holds at 0.2. In other words, SUSHI can chart its path independent of Bitcoin. Therefore, a fall in Bitcoin price may not necessarily affect SushiSwap and vice versa.

SUSHI correlation with Bitcoin

SushiSwap is technically ready to hit $20

SUSHI has settled above $15 after the majestic price action. The gains have been confined in an ascending parallel channel since January 25. In several instances, the price has broken above the channel’s middle boundary. However, the upper channel’s edge has remained intact and unshaken.

At the time of writing, SushiSwap is attempting to rise above the middle boundary resistance. Trading above this zone may encourage more buyers to join the market as bulls increase their positions. A subsequent increase in trading volume may push SushiSwap to highs above the channel and perhaps place the token on a trajectory toward $20.

SUSHI 4-hour chart

Looking at the other side of the picture

Despite technical and on-chain pictures looking bullish for SushiSwap, a bearish impulse may occur due to the overbought conditions seen with the Relative Strength Index.

Moreover, if the price fails to settle above the middle layer of the ascending channel, overhead pressure will put the lower edge under immense stress. In the event of a continued correction, the 50 Simple Moving Average at $10.5, the 100 SMA currently at $8.8 and the 200 SMA at $6.75 will come in handy, providing support.