STEPN hits a new high? GMT prices see first 'bull flag' formation, heading towards $5

STEPN (GMT) has bounced strongly against the USD this week as it looks set to form a classic bullish technical pattern known as a "bull flag".

GMT eyes more upside

Prices are up 30% so far this week in GMT, following a strong recovery to an all-time high of nearly $3.85 before a relatively modest correction to nearly $3. In particular, the corrective phase occurs within a descending parallel channel, increasing the likelihood that the price will eventually break out of the channel and move upwards.

This is precisely because conventional analysts see a strong rise following a range-bound price correction as a bullish continuation. The bull flag that has been forming at GMT, as mentioned above, could lead to a rally in the coming weeks, as shown in the chart below.

GMT/USD 4-hour price chart shows a 'bull flag'. Source: TradingView

Generally, traders achieve bullish flag targets by measuring the height of the previous uptrend and forecasting from the breakout point. The classic pattern on the GMT chart shows that it is currently eyeing above $5, about 65% higher than the current price.

Veteran investor and analyst Thomas Bulkowski said Bull Flag has a nearly 64 percent success rate in hitting its upside target.

But the risk of a fall towards $2 is high if GMT prices break below the bull flag's downtrend line (the last line of support), which is aligned with the 50-4H exponential moving average (50-4H MA; red line) at 2.91 Coincidentally at the dollar.

STEPN's 38,000% increase is a "complete joke"?

GMT has soared nearly 38,000% in less than two months, driven by hype surrounding STEPN's "move-to-earn" economic model, which offers users of its app A native currency called Green Satoshi Token (GST), which users can get by simply exercising.

STEPN generates revenue ($26.81 million in Q1 2022) through the sale of so-called "NFT sneakers." The "NFT sneaker" is a unique digital image, and players who own it can earn GST first. The game uses proceeds to buy first, then burns GMT, so if demand for the token rises, it puts upward pressure on its price.

Independent market analyst Wangarian believes that the hype surrounding STEPN is similar to what was witnessed in the earn-and-play metaverse Axie Infinity in May 2021. Between May and November last year, AXS/USD rose from around $2.50 to around $178.

However, independent market analyst Michaël van de Poppe worries that GMT's market capitalization of close to $1.9 billion - a fully diluted valuation of about $18 billion - is a "total joke".

But he added that GMT's "valuation could still become ridiculous" because of STEPN's marketing tactics.

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