Tornado Cash Surges 40% After Sanctions Removal, Analysts Warn of Correction

Tornado Cash ( TORN ) token has experienced a dramatic 40% price surge in the past 24 hours following its removal from the U.S. Treasury's Office of Foreign Assets Control sanctions list. Despite the significant rally, multiple technical indicators suggest the cryptocurrency may be poised for a substantial pullback as the market digests this development.

The token's sudden upward momentum has pushed its Relative Strength Index (RSI) beyond the critical 70.0 threshold, placing it firmly in overbought territory. This technical signal has historically preceded price reversals for the cryptocurrency, as it indicates market enthusiasm may have reached unsustainable levels. Analysts note that this pattern has been particularly reliable for TORN in previous market cycles.

"When we see RSI readings this elevated, the bullish momentum is typically exhausted," said one market analyst who requested anonymity because they weren't authorized to speak publicly. The consolidation pattern forming at current levels suggests diminishing buyer interest despite the positive regulatory news.

Further complicating TORN's outlook is its concerning performance on the Chaikin Money Flow (CMF) indicator, which measures volume-weighted accumulation and distribution patterns. The indicator remains entrenched in negative territory and has maintained significant distance from the neutral zero line for an extended period. This persistent bearish signal indicates that selling pressure continues to dominate despite the recent price appreciation.

Tornado Cash is currently experiencing its highest outflows since its launch, raising additional red flags for investors monitoring the token's long-term prospects. These substantial outflows suggest a significant portion of investors are using the recent price spike as an exit opportunity rather than accumulating positions.

TORN is trading at $11.77 as of press time, representing a 41% increase over 24 hours. The token reached an impressive intraday high that briefly represented an 88% gain before moderating. Over the past 12-day period, TORN has accumulated a 135% increase, bringing it to levels not seen since before the sanctions were imposed.

The combination of overbought conditions and negative money flow places TORN at risk of breaking below key support levels at $11.63 and $9.75, according to technical analysis. Should these supports fail, analysts project the token could retreat to $7.36, erasing a substantial portion of its recent gains.

Not all market observers maintain a bearish outlook, however. Some note that if TORN can maintain positions above the $11.63 support level in the coming days, it could potentially challenge resistance at $15.81. A successful breach of this level would invalidate the correction thesis and potentially establish a new trading range for the token.

Regulatory relief has provided Tornado Cash with its first significant positive catalyst in months, but whether this fundamental development can overcome technical selling pressure remains uncertain as traders closely monitor volume patterns in the coming sessions.

The privacy-focused cryptocurrency protocol has faced significant regulatory challenges since being sanctioned, with its removal from the sanctions list representing a major regulatory shift in its operational outlook.