Decentraland's Resurgence: Will MANA Reach $0.20?

Decentraland (MANA) has experienced significant gains on January 17, following a strong performance in the GameFi sector. Although recent market trends show volatility due to Bitcoin's pullback, there is potential for MANA to bounce back. Key metrics indicate mixed signals about the sustainability of this rally. This article discusses the current state of Decentraland and the factors influencing its price movement.

Key Takeaways

Decentraland (MANA) broke through a resistance level at $0.15 on January 17.
The GameFi sector is experiencing strong gains, but momentum has slowed recently.
Bitcoin's recent pullback has negatively affected MANA's price.
Onchain metrics suggest profit-taking activity may impact future price developments.
There is potential for MANA to reach $0.20, but traders should manage expectations.

Decentraland's Recent Performance

Decentraland (MANA) demonstrated impressive gains on Saturday, January 17. Over the last ten days, MANA faced challenges at the local resistance level of $0.15. However, bulls successfully broke past this level on Saturday, indicating a shift in market momentum.

The GameFi sector, including prominent titles like Axie Infinity (AXS), has shown substantial growth recently. Yet, this momentum appears to have waned in the last 48 hours, leaving traders wondering if it might pick up again later this week.

The recent pullback in Bitcoin (BTC) prices has had a downward effect on MANA, contributing to a significant $864 million in liquidations across the market within a single day. If this movement is merely a liquidity hunt, the chances for a recovery could increase, positioning MANA and select altcoins for a possible bounce back.

Evaluating the Strength of Decentraland Bulls

According to Coinalyze data, the Open Interest, which saw a nearly 50% increase over the weekend, witnessed a 10% decline in the hours that followed.

MANA Santiment
Source: Santiment

On January 18, there was a noticeable spike in Dormant Circulation, which was accompanied by a rapid price drop of MANA. This increase typically suggests that older coins are being moved onchain, likely for selling purposes.

Furthermore, the 30-day Market Value to Realized Value (MVRV) ratio, which had reached 10.3% on January 13, dropped to -4.7% at the time of writing. This indicates that short-term holders are, on average, experiencing losses once again.

The Mean Coin Age metric has also declined over the past week, reflecting a lack of accumulation, a surge in dormant tokens being moved, and short-term holders cashing out, which suggests a weak long-term market conviction.

MANA Spot Volume Bubble Map
Source: CryptoQuant

The Spot Volume Bubble Map indicates that the market is not currently overheated. In previous cycles, the end of 2024 and the peak in 2021 saw overheated conditions leading to prolonged downtrends.

The Exchange Netflow metric showed considerable MANA outflows over the past two days, which is a somewhat positive sign. However, investors would like to see consistent outflows in the coming weeks to enhance optimism.

Overall, onchain metrics for Decentraland indicate a significant risk from profit-taking activity. While a rally toward $0.20 and $0.25 is within the realm of possibility, traders and investors should remain cautious and realistic about their expectations.

Traders, in particular, should prioritize taking profits as MANA approaches nearby resistance zones, such as $0.17 and $0.19.

Final Thoughts

While Decentraland's recent performance has been promising, market volatility challenges its path forward. Staying informed about market dynamics and managing positions carefully will be crucial for traders navigating the current landscape.