Waves (WAVES) Was Down 16% the Past Week. Should You Buy?

Waves was a high-flying cryptocurrency earlier this year, gaining more than 240% in March 2022, but has since lost much of those gains.

According to CoinMarketCap, the price of the Waves (WAVES) alternative coin is currently $5.48 on cryptocurrency exchanges, down 16% over the past seven days and more than 91% over the past 60 days as of press time. In March of this year, WAVES splashed up more than 240% on a tsunami-like surge of positive news, only to crash down in recent weeks.

What does the Waves project do?

The website for the project states that Waves is a fast, scalable blockchain that's purpose-built for programmers to create decentralized apps, autonomous organizations, and smart contracts much more easily than other available systems.

Waves boasts its own Neutrino stablecoin, NFT marketplace, decentralized crypto-trading exchange, financial services, and NFT-based gaming portal. Additionally, the Waves blockchain claims to be more environmentally friendly than proof-of-work protocols because it operates on a base-layer proof-of-stake (POS) technology. That's the same POS software used to power Avalanche with transaction fees that are fractions of a penny. With so much going for it, why is Waves trading down?

WAVES technical chart shows recent 'death cross'

While the underlying fundamentals of the Waves project are strong, it's run into some trouble on the technical charts recently. This past weekend, technical analysis showed that the 50-day moving average -- which is a trend tool to monitor short-term pricing action -- for the WAVES coin dropped or "crossed" lower than the 200-day moving average, which tracks a longer perspective on the pricing trend.

Analysts who track this type of technical chart movement call it a "death cross" when short-term price averages cross below the longer term price trend. The "death cross" is usually seen as a bearish indicator of potential declining price action in the immediate future. This technical signal could be a reason for the trending price drop as investors may be exiting the project. This downward movement is further reinforced by DeFiLlama.com, which shows declines across the board at daily, weekly, and monthly intervals of staked WAVE coins. That means people are not staking their WAVE coins to earn passive income, which is creating liquidity problems in the short term for other traders who want to buy or sell WAVE. Those are not positive signs in the short run. 

Is WAVES a buy?

As stated already, WAVES is trading at a more than 91% discount from its peak price just two months ago. The Waves ecosystem is robust and nothing has changed about that project itself -- it seems to be a victim of the broader economic downturn and market conditions. 

Investors should always do their own research and weigh their own investment risk when considering any potential outlay of cash. And it's important to note that WAVES is currently oversold and undervalued as an asset -- it's unlikely to stay this low for very long.