Understanding Monad's Post-Mainnet Surge: Are We Close to a Price Correction?

This article explores the recent price action of Monad (MON) following its mainnet launch on November 24. The analysis highlights the surge in Open Interest and Derivative Volume driven by whale activity, as well as the implications of overbought market conditions on future price movements.

Key Takeaways

Whale activity has increased Open Interest to $178 million and boosted Derivatives Volume, indicating strong bullish sentiment.
Overbought RSI and Sequential readings introduce volatility risks, with critical resistance at $0.05 and support at $0.033.
After its mainnet launch on November 24, Monad experienced a significant price rally, climbing 51.2% to a high of $0.048 before stabilizing at $0.043, alongside an 85% increase in trading volume to $1.22 billion.

Monad Post-Mainnet Surge

Whale Futures Demand Skyrockets

After several exchange listings, whales moved aggressively into the market to acquire Monad [MON] and establish significant positions. Notably, there was a surge in demand for future contracts. For instance, one whale opened a long position of 125.57 million MON, valued at around $5.14 million, which generated over $2 million in unrealized profits following the price increase. Another whale initiated a 3× long position on 171.68 million MON worth $5.6 million, which came with $654k in unrealized gains.

This whale activity significantly impacted the derivatives market, causing Open Interest to rise by 59.51% to a record high of $178 million. Derivatives Volume surged by 139% to $2.65 billion, showcasing robust participation from larger traders.

Monad Open Interest

Source: CoinGlass

High demand in the futures market, especially among whales, usually indicates strong bullish expectations. These leveraged positions create synthetic buying pressure, often leading to increased retail involvement.

Retail Traders Join the Momentum

In addition to whale activity, Monad attracted considerable retail interest as traders began acquiring the altcoin. According to CoinGlass, Spot Netflow turned negative after a significant gain the previous day, marking a sudden change in market sentiment. Consequently, many early investors took profits, contributing to a negative Netflow of $7.7 million.

Monad Spot Netflow

Source: CoinGlass

The Netflow shifted sharply on November 26, dropping to -$2.44 million, suggesting that retail traders were withdrawing funds while accumulating MON once again. Such exchange outflows typically reduce the available supply and can support upward price movements.

Momentum Reaches Overbought Levels

AMBCrypto's analysis found that Monad maintained its momentum across both futures and spot markets. The Sequential Pattern Strength reached 107, indicating it had entered overbought territory. Additionally, the Relative Strength Index (RSI) peaked at 84 before settling at 79 as of the latest update.

MON RSI & SPS

Source: TradingView

These elevated metrics reflect strong buyer dominance, often signaling a continuation of trends. However, they also pose volatility risks when the market becomes crowded with leveraged positions.

If whale interest in futures remains strong and retail traders continue to withdraw, MON could potentially break through the $0.05 resistance and aim for higher prices. Conversely, an unexpected liquidation of overcrowded long positions might push MON down to the $0.033 support level.