Is Immutable X (IMX) Losing Momentum? On-Chain Data Signals Potential Price Drop

Immutable X (IMX) emerged as a beacon of hope for NFT enthusiasts on the Ethereum network. This layer-two scaling solution promised to revolutionize NFT trading with lightning-fast transactions and near-zero gas fees. As the NFT space experienced renewed interest in early 2023, IMX rightfully garnered attention. But, as the initial hype cools down, critical on-chain metrics are painting a concerning picture for Immutable X. Is IMX struggling to sustain its demand? Let’s delve into the data and analyze what it means for the future of IMX.

Decoding the On-Chain Signals: Is IMX Losing Traction?

According to recent on-chain data from Santiment, a crucial indicator is flashing red: network growth is declining. Specifically, the number of new addresses being created on the IMX network is shrinking. Let’s break down what this means:

• Peak Network Expansion: Around March 17th, we saw a peak in both network expansion and the price of IMX. This suggests a healthy influx of new users and interest.
• Sharp Decline: Fast forward to March 24th, and the number of new addresses plummeted from a high of 594 to a mere 84. This drastic decrease in just a week signals a significant drop in new users joining the IMX network.

Why is declining network growth a concern?

In the crypto world, network growth is a vital sign of a project’s health and future potential. A consistent decline suggests:

• Diminishing Demand: Fewer new addresses often indicate reduced interest and demand for the underlying token. If fewer new users are entering the ecosystem, the pool of potential buyers and participants shrinks.
• Bearish Signal: In technical analysis, a persistent decline in network growth is generally considered a bearish indicator. It can foreshadow potential price corrections or a struggle to maintain upward momentum.

Therefore, the current trend of decreasing network traction could pose a significant challenge to IMX’s growth prospects in the near future. To sustain and grow, any crypto project needs a continuous influx of new users and adoption.

Long-Term Holders Taking Profit: A Sign of Waning Confidence?

Adding to the bearish outlook is another critical on-chain metric: Mean Coin Age (90d). This metric, also provided by Santiment, reveals insights into the behavior of long-term IMX holders. Let’s understand what the data is telling us:

• Profit-Taking Frenzy: The data indicates that long-term IMX holders appear to have initiated selling their holdings starting in early February. This trend is visualized by a downward sloping red line in the chart below.
• Significant Drop in Mean Coin Age: The IMX Mean Coin Age (90d) has decreased substantially from 60.43 on February 2nd to 28.78 as of March 24th. This is a considerable decrease in a relatively short period.

What does Mean Coin Age tell us?

The Mean Coin Age (90d) metric essentially calculates the average age of recently traded tokens, reflecting how long those tokens have been sitting in their previous wallets. A declining Mean Coin Age typically suggests:

• Long-Term Holder Selling Pressure: A downward trend often signals that long-term holders, who typically hold onto their assets for extended periods, are starting to sell. This could be due to various reasons, including profit-taking after a price increase or a loss of confidence in the asset’s future potential.
• Potential Market Correction: When long-term holders start selling, it can introduce significant selling pressure in the market, potentially leading to price corrections or further declines.

The combination of declining network growth and long-term holder selling paints a concerning picture for IMX. If this selling pressure persists and new demand fails to materialize, the price of IMX could face further downward pressure.

Price Prediction and Key Support & Resistance Levels for IMX

To further analyze the potential price trajectory of IMX, let’s turn to the Global In/Out Of Money (GIOMAP) data from IntoTheBlock, a blockchain analytics firm. GIOMAP helps identify key price levels based on the volume of tokens bought at different price points. Here’s what the data suggests for IMX:

Critical Support Level: $1.05

• Significant Volume at $1.05: GIOMAP data reveals that a substantial number of addresses – 2,550 to be precise – purchased a massive 664 million IMX coins around the $1.05 price level. This indicates a strong support zone.
• Potential Downside Target: If IMX fails to hold above this $1.05 support, the analysis suggests a potential fall below $1.
• Next Support at $0.83: Should the $1.05 support break, the next significant support level appears to be around $0.83. At this level, approximately 4,000 addresses bought 588 million coins, which could act as a buffer against further declines.

Key Resistance Level: $1.33

• Resistance at $1.33: On the upside, the most immediate resistance level seems to be around $1.33. At this price point, 2,600 addresses purchased 32 million coins.
• Bullish Invalidation: According to the analysis, if IMX can decisively break above this $1.33 resistance, it would invalidate the current bearish outlook.
• Potential Upside Target: $1.66: A break above $1.33 could pave the way for further gains, potentially reaching the $1.66 level. Around $1.66, another 3,400 addresses purchased 14.5 million coins.

In Summary: Key Price Levels to Watch

Concluding Thoughts: Navigating the Uncertainty Around IMX

The on-chain metrics for Immutable X are currently presenting a mixed bag of signals, leaning towards caution. Declining network growth and profit-taking from long-term holders raise concerns about sustained demand. While the project’s fundamentals as a layer-2 scaling solution for NFTs remain strong, market sentiment and investor behavior are crucial drivers in the short to medium term.

For IMX to regain bullish momentum, it needs to:

• Attract New Demand: Efforts to onboard new users and projects onto the Immutable X platform are crucial to reverse the declining network growth trend.
• Hold Key Support: Maintaining the price above the $1.05 support level is vital to prevent further price declines.
• Overcome Resistance: Breaking through the $1.33 resistance would signal renewed bullish momentum and potentially attract more buyers.

Ultimately, the future price action of IMX will depend on whether it can reignite demand and overcome the current bearish signals. Investors should closely monitor these on-chain metrics and price levels to make informed decisions in this dynamic market. Keep an eye on how Immutable X evolves and adapts to the changing landscape of the NFT market. Will it find new demand, or will the current trends persist? Only time will tell.