SEI must reclaim this important support level to avoid a major sell-off.

In times when fear spreads and the entire crypto market falls into a weakening state, even projects with a good platform find it hard to escape the pressure of correction. Last week, Sei (SEI) was swept into that vortex as the bears took control, while market sentiment remained fragile and lacking support.

The loss of the key support zone at 0.1206 USD has pushed SEI's price into a more vulnerable state. Data from the spot market shows that “whales” tend to increase their short positions, indicating that the downward pressure is not only coming from the panic of retail investors but is also reinforced by large capital flows.

Liquidity weakened rapidly right after the support level was breached. The break below the 0.1206 USD mark has opened up the risk of prices sliding deep into the 0.0689 USD area — a region that previously served as an important support point in the past.

In the context of not being able to quickly regain important technical levels, market confidence continues to be eroded and the risk of a momentum sell-off is becoming increasingly evident. The focus has now shifted from growth expectations to prioritizing risk control and preserving liquidity.

Why do traders increase their exposure when prices drop?

Despite the significant weakening in the spot market, the derivatives segment of SEI has witnessed a remarkable boom. At the time of writing, the derivatives trading volume surged to 32 million USD in just 24 hours, indicating a strong increase in speculative interest.

Notably, the open contract (OI) is increasing simultaneously with the trading volume, reflecting that traders are actively increasing their positions instead of reducing risk. This is a sign of calculated positioning, not a surrender mentality under market pressure.

Source: CoinGlassIn the context of weakening prices, the simultaneous rise in volume and OI often indicates that confidence in using leverage is forming. Many traders seem ready to “bet” on the continuation of the trend, expecting the volatility range to be expanded in the near future.

However, the downside of this development is the increased liquidation risk, especially when prices are still trading below previous important support levels. Just one strong fluctuation can trigger a wave of forced position closures, thereby amplifying price volatility in both directions.

Whale orders are still active!

The average order size index in the spot market shows a clear and persistent participation mark of “whales” as SEI continues to decline. This implies an active positioning strategy of large capital flows, rather than a panic sell-off wave from retail investors.

Source: CryptoQuantNotably, large-scale trading orders continue to emerge regularly even as prices weaken. This movement reflects an ongoing distribution and absorption process, indicating that major players are still quietly regulating and shaping the direction of the market, despite the increasingly negative overall sentiment.

Can SEI regain control before liquidity dominates?

Momentum indicators continue to reflect a prolonged weakening phase, although initial signs of stability have begun to appear on the chart. At the time of observation, the RSI remains in the low range, indicating that buying pressure is still cautious, but at the same time implying that selling pressure is gradually easing.

The MACD line remains below the signal line, but the histogram has noticeably narrowed, indicating that the downward momentum is losing strength. Notably, the green MACD line has started to curve upwards, revealing the potential for a short-term bullish reversal.

Source: TradingViewIn this context, the crypto market often tends to experience technical retracements or short-term price reactions, although there is not enough basis to assert a sustainable reversal trend.

Structurally, SEI needs to convincingly reclaim the price zone of 0.1261 USD soon. A clear breakout above this level will help prevent the old support scenario from turning into new resistance. Conversely, if it fails, the prevailing concern will still loom, and the zone of 0.0689 USD is likely to continue being a key watch point. In a more positive scenario, a return above 0.20 USD will mark a significant structural improvement, thereby alleviating the current bearish pressure.

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