COTI price surges on Central Bank of Israel CBDC project participation

• COTI price breaks above a descending wedge pattern, signaling a change in market structure from bearish to bullish.
• COTI announces its participation in the Central Bank of Israel for its CBDC project.
• On-chain data shows COTI's capitulation events occurred on Friday and Sunday.
• A daily candlestick close below $0.066 would invalidate the bullish thesis.

COTI (COTI) price retraces by 1.2% at $0.1125 at the time of writing on Wednesday after breaking above a descending wedge pattern last Friday, leading to an 8% rally over the subsequent four days. The announcement of COTI's participation in the Central Bank of Israel's CBDC project coincided with capitulation events on Friday and Sunday, as indicated by on-chain data, suggesting the possibility of a price rally for COTI in the near future.

COTI announces its participation in the Central Bank of Israel's CBDC project alongside PayPal and Fireblocks

On Tuesday, COTI announced on Twitter that it will participate in the Central Bank of Israel's CBDC project alongside companies like PayPal and Fireblocks.

COTI views CBDCs as a significant application for its forthcoming privacy-focused infrastructure and is excited to announce this achievement. The Bank of Israel has been exploring CBDCs since 2018 and will now explore with COTI the implementation and use of advanced functionalities and ways to build an ecosystem around its CBDC.

"As the only blockchain network selected to take part, COTI's privacy-focused L2 blockchain offers advanced features to hold and securely transact with CBDCs", COTI tweeted.

COTI's expertise in blockchain technology and selection as the only blockchain network to participate in the project alongside giants like PayPal and Fireblocks showcases its credibility and potential for growth. 

Additionally, COTI's privacy-focused L2 blockchain offers advanced features for securely transacting with CBDCs, making it well-positioned to meet the growing demand for credible and scalable blockchain infrastructure in the CBDC marketplace. This milestone solidifies COTI's reputation and potential for future success in the crypto and finance areas.

COTI price sets for a rally 

COTI’s price broke out of the falling wedge pattern on Friday, leading to an 8% rally over the subsequent four days. This pattern was formed by joining multiple highs and lows with trendlines from mid-March to late July, and this breakout suggests a bullish move. As of Wednesday, it retraces and trades slightly down 1.2% at $0.1125.

If COTI continues to retrace, it could find support at the breakout level at $0.0989, coinciding closely with the 50-day Exponential Moving Average (EMA) at $0.1015. This would establish a critical zone of support that should be monitored closely.

If this support area at $0.0989 holds, COTI could rally 49% to retest its daily resistance at $0.1477.

On the daily chart, the Relative Strength Index (RSI) and the Awesome Oscillator (AO) indicators are trading above their neutral levels of 50 and zero, respectively. This robust momentum signals a strong bullish sentiment in the market.

COTI/USDT daily chart

On-chain data provider Santiment's Network Realized Profit/Loss (NPL) indicator computes a daily network-level Return On Investment (ROI) based on the coin's on-chain transaction volume. Simply put, it is used to measure market pain. Strong spikes in a coin's NPL indicate that its holders are, on average, selling their bags at a significant profit. On the other hand, strong dips imply that the coin's holders are, on average, realizing losses, suggesting panic sell-offs and investor capitulation. 

In COTI's case, the NPL indicator dipped from -319,060 to -1.7 million from July 18 to July 19 and from 64,244 to -862,320  from July 20  to July 21, respectively. This negative downtick indicates that the holders were, on average, realizing losses.

During this capitulation event, COTI's supply on exchanges declined from 121.64 million to 111.53 million in four days. This decrease in supply on exchanges indicates that investors are moving COTI tokens to wallets and reducing selling activity, signaling a bullish outlook and further denoting investor confidence in COTI.

COTI Network Realized Profit/Loss and Supply on Exchanges chart

Even though on-chain metrics and technical analysis point to a bullish outlook, if COTI's price makes a daily candlestick close below $0.0660, the bullish thesis would be invalidated by creating a lower low on the daily chart. This development could see COTI's price decline by 17% to retest its weekly support at the $0.0551 level.