Sandbox token SAND rallies 260% in November ahead of play-to-earn metaverse launch

Nevertheless, signs of a bearish divergence between SAND’s price and momentum may hamper its ongoing upside momentum.

SAND, the native token of The Sandbox — a blockchain-based gaming platform owned by Animoca Brands — inched higher on Nov. 23, building on its gains made across November to reach another record high.

The price of SAND rose to $5.64 after swelling 16.25% intraday, but it retraced some of those gains to trade at $5.54 at the time of writing. The move took the month-to-date and year-to-date gains of The Sandbox’s token to nearly 260% and over 14,700%, respectively, with its market capitalization crossing above $5 billion, making it the 41st-largest coin in the crypto sector.

SAND/USDT daily price chart. Source: TradingView

Many catalysts behind the SAND price rally

This month’s exuberance was in part attributable to The Sandbox’s announcement that it will open up part of its metaverse via its multi-week play-to-earn Alpha event beginning Nov. 29 at 1:00 pm UTC.

In detail, the blockchain startup confirmed that it would select a group of 5,000 players to earn up to 1,000 SAND (currently worth $5,540) and three nonfungible tokens (NFT) as they spend time across Sandbox’s 18 virtual experiences.

Get ready for The Sandbox Alpha!
Launching November 29th
Anyone can experience the Alpha hub and three experiences
5,000 Alpha passes giving access to content, NFT, and 1,000 SAND!

Get all details below https://t.co/63iAl5MMmS pic.twitter.com/OiXmbAWYN2

— The Sandbox (@TheSandboxGame) November 16, 2021

Additionally, the recent bout of buying across SAND spot markets — which saw its price gain over 37% and 40% against the U.S. dollar and Bitcoin (BTC) in the previous 24 hours — came on hopes of a potential collaboration between The Sandbox and sports merchandise giant Adidas.

On Monday, Adidas discussed on Twitter the potential to build a so-called “adiVerse” with support from The Sandbox.

adiVerse anyone?

What should we build, together in @TheSandboxGame? ⬇️ https://t.co/VbAdIi9cxN

— adidas Originals (@adidasoriginals) November 22, 2021

The tweet had received nearly 1,450 retweets and 4,400 likes at the time of writing.

RSI divergence in play

Despite solid fundamentals, SAND risks rallying into a bull trap, as its price trends show clear deviations from its relative strength index (RSI).

Specifically, the RSI typically returns higher values when the market rises and lower values when it falls. Occasionally, the RSI and the market move in an opposite direction, leading to so-called RSI divergences.

Related: Metaverse and blockchain gaming altcoins rally while Bitcoin looks for support

That said, a falling RSI and a rising market show a bearish divergence. Notably, since the beginning of November, SAND has been forming a similar RSI divergence, a sign that the momentum in the move to the upside has been slowing down.

SAND/USDT daily price chart featuring bearish RSI divergence. Source: TradingView

That does not mean that the bull trend is over, but it alerts to a possible short-term pullback move. The following chart shows the potential entry and exit targets for the sessions ahead, based on the Fibonacci retracement graph between the $0.17 swing low and $8.72 swing high.

SAND/USDT daily price chart featuring Fib level targets. Source: TradingView

A pullback upon testing the 0.382 Fib level at $5.45 could see SAND return to its next support line at the 0.5 Fib level, near $4.45. The same line has acted as resistance during SAND’s upside attempts between Nov. 18 and 22.

Conversely, a continued move above $5.45, accompanied by a rise in volumes, may open the possibility for SAND to test $6.70 — at the 0.236 Fib level — as its next upside target.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, and you should conduct your own research when making a decision.