- OM’s price spiked by 57.85% over the past month
- Mantra’s new address creation rate dropped by 99.7% over the past 3 months
Mantra’s address creation rate falls
Source: X
While Mantra has seen sustained growth on its price charts lately, its adoption rate has been declining.
According to Ali Martinez, Mantra’s network has significantly contracted, with new address creation falling by 99.7%. As such, new addresses created dipped from 110,517 in November to 252. This decline in new address creation is a sign that fewer new users are joining the network – A sign of dwindling interest, demand, and on-chain activity.
Source: IntoTheBlock
We can see this waning interest as the adoption rate dropped from 53% to 23% over the past week.
Such a huge drop could result in a shrinking user base, further resulting in lower demand for transactions and thus reducing the overall network activity. This also shows that there are no users entering the market while also, the existing ones are closing theirs.
Source: Santiment
Additionally, Mantra’s Price DAA divergence has remained negative throughout the past three weeks, further confirming the fall in network activity.
Historically, when a network lacks users, it has preceded a price decline for its native tokens as it reflects market bearishness. In this case, we can see the lack of demand slowly negatively affecting OM’s price movement.
Impact on OM’s charts?
Although Mantra’s adoption rate has declined over the past few months, OM’s price has held on strong. In fact, at the time of writing, the altcoin was trading at $7.53. This marked a 5.73% hike over the last 24 hours.
Equally, this bullish outlook seemed to have extended itself on the monthly charts by 57.85%.
Source: Coinalyze
Despite the price pump, the overall market sentiments remain bearish though.
For example, we can see this bearishness as most investors are taking short positions. According to Coinalyze, the Futures market has 52.66% of investors going short while 47.3% are longs. When short positions dominate the market, it implies that most traders expect the price to drop in the near term – A sign of strong bearish sentiment.
Source: Coinglass
Equally, we can see these bearish sentiment as the market has been seeing more exchange inflows than outflows. Additionally, OM’s netflows turned positive and hit $1.02 million after being negative for three consecutive days. When this turns positive, it implies that more traders are transferring their OM tokens into exchanges, probably preparing to sell.
If this turns to selling, it could put pressure on OM’s price.
To put it simply, although OM’s price is making gains, the network fundamentals are still weak. The fall in network adoption is an illustration of the same. For the price to sustain its recent gains, the network needs new addresses and more active users.
Usually, low demand results in lower prices. Thus, if the adoption rate continues to decline, speculative demand can drive the price down and a retrace could see OM drop to $7.0.
However, if the speculative uptrend can hold for the short term, the altcoin will attempt $8.
