Yearn Finance risks pullback after YFI price gains 100% in less than 3 weeks

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Yearn Finance (YFI) looks poised for a price correction after rising five days in a row to approach $42,000. Notably, an absence of enough buying volume coupled with overbought risks is behind the bearish outlook.

YFI price surged by a little over 47% in five days to $41,970 as traders rotated capital out of “top-cap” cryptocurrencies like Bitcoin and Ether and looked for short-term opportunities in the altcoin market.

On Dec. 16, the Yearn Finance team announced that they had purchased more than $7.5 million worth of YFI tokens from the open market at an average price of $26,651 per unit. They also revealed $45 million extra cash in their Treasury that they would use to continue their YFI buyback spree. Typically, a bearish divergence between price and volume leads to either correction or consolidation till conviction increases. As a result, the likelihood of YFI at least pausing its ongoing price rally is high, with its daily relative strength index also entering its overbought zone above 70, a sell signal.

 

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