MYX Finance Faces 11% Drop Amid Dwindling Liquidity – Can Buyers Sustain This Support?

In recent trading sessions, MYX Finance has found itself in a precarious position, experiencing an 11% decline as sellers dominated market movements. The overall sentiment, reflected in on-chain data and derivatives metrics, continues to show weakness, indicating that risks may persist if demand does not recover.

Key Takeaways

MYX Finance has seen an 11% decrease in value, with bearish sentiment intensifying.
Total Value Locked (TVL) in MYX Finance plummeted by approximately $1.16 million in eight days, reflecting a decline to about $22.64 million.
Protocol earnings have suffered a drastic drop of 99.37%, collapsing from $16,685 in October to just $105 now.
Perpetual traders are leaning toward bearish positions, shown by negative funding rates and a decline in Open Interest.
MYX is positioned at the lower boundary of an ascending channel, hinting at a potential short-term bounce, but critical support levels are under scrutiny.

MYX Finance [MYX]

Declining Liquidity Weighs Down MYX Finance

The liquidity within MYX Finance has decreased significantly, further strengthened by the bearish sentiment as investors are exiting the protocol. A crucial measure of a protocol’s health, Total Value Locked (TVL), illustrates a concerning situation with a sharp decline.

According to data from DeFiLlama, MYX Finance's TVL has dropped by approximately $1.16 million over the past eight days, now resting at around $22.64 million.

MYX total value locked. Source: DeFiLlama

AMBCrypto tracked the primary reason behind this liquidity outflow, which stems from a significant decline in the protocol's earnings in December. After reaching peak earnings of $16,685 in October, MYX's revenue has plummeted to a mere $105 at the time of writing, marking an unprecedented 99.37% drop.

The decline in earnings indicates decreased usage of the protocol, as revenue is closely tied to transaction activities. Additionally, both unlocks and withdrawals are contributing to increased selling pressure, highlighting diminished demand across the ecosystem.

Shift in Perpetual Trading Sentiment

In the perpetual trading market, there has been a noticeable shift towards bearish sentiment. The Open Interest-Weighted Funding Rate has turned negative, signaling a dominance of short positions, showing around -0.0140% at the latest update.

Source: CoinGlass

Accompanying this sentiment shift is a 14% drop in Open Interest, now at $21.27 million, reflecting an outflow of $3.06 million from the derivatives market. Furthermore, taker-driven Spot Volume has fallen sharply, decreasing from $171.96 million to $44.74 million.

When falling prices are coupled with declining trading volumes, it typically indicates bearish market conditions. However, there are signs that the selling pressure may be starting to ease.

Analyzing Price Movements

Technical analysis indicates that MYX is currently positioned within a short-term bullish price structure. The altcoin is trading at the lower boundary of an ascending channel, suggesting a potential for a brief price bounce.

MYX trading chart Source: TradingView

Yet, when examining the overall structure historically, the outlook appears fragile. Traders are closely monitoring two critical support levels: the recent higher low around $0.34 and, further down, the channel's origin near $0.23. Failing to maintain these support levels could exacerbate the downtrend for MYX.

Conclusion

In summary, MYX Finance is facing significant challenges as liquidity continues to dwindle, and bearish sentiment rises among traders. While there may be short-term opportunities for a bounce, the overall market conditions and critical support levels will play a crucial role in the altcoin's future trajectory.