Understanding MYX’s 11% Decline: Insights for the Future

As of January 5th, MYX Finance [MYX] faced a challenging day, experiencing an 11% decrease as market dynamics shifted toward a bearish stance. However, even with selling pressure, data indicates that buyers remained active, suggesting a potential rebound might be in the works.

Key Takeaways

MYX experienced an 11% decline due to significant profit-taking in the perpetual market.
The Open Interest in MYX dropped about $16.7 million, indicating less outstanding contract value.
Total liquidations remained low, at $1.02 million, pointing to planned profit-taking rather than panic selling.
On-chain activities and liquidity measures show modest growth and bullish sentiment.
The potential for a rally exists, as liquidity clusters above the current price may attract upward price movement.

MYX weakened early as perpetual traders reduced exposure amid shifting sentiment.

Reasons Behind the Market Decline

The recent downturn in MYX prices is primarily linked to substantial profit-taking activities within the perpetual market over the last day. This trend is evident in three key MYX perpetual indicators. The Open Interest fell by approximately $16.7 million, indicating a reduction in the total value of outstanding MYX contracts in the perpetual market.

Despite the notable capital outflow, MYX recorded total liquidations—positions that were forcefully closed after reaching stop-loss levels—of only $1.02 million. This indicates that around $15.68 million worth of MYX positions were likely closed voluntarily by traders aiming to secure profits, rather than being due to forced selling. This shift may have momentarily applied downward pressure on the price as traders adjusted their positions at lower levels.

Source: CoinGlass

MYX’s Open Interest-Weighted Funding Rate remained positive throughout the downturn, indicating that most open positions are effectively bullish. This suggests that overall sentiment remains optimistic, despite the recent price correction.

Growth in On-chain Activity

Despite the price downturn, on-chain activity has seen modest growth, with protocol revenue rising from $5 to $18. Total Value Locked (TVL)—a measure of the liquidity committed to protocols—has continued to increase, even amid falling prices.

Since January 1st, the TVL has risen by approximately $720,000, reflecting ongoing trust among investors who are locking their tokens for potential rewards and a long-term investment strategy.

MYX Total Value Locked Source: DeFiLlama

Additional metrics bolster this positive trend, with Perpetual Trading Volume on decentralized exchanges seeing a significant uptick. Over the past day, trading volume increased by $66.24 million, while cumulative trading volume over the last week reached an impressive $1.936 billion.

What’s Next: Potential for Rally or Further Decline?

The Liquidation Heatmap suggests a potentially optimistic outlook for MYX, as liquidity clusters are concentrated above the current price point. These clusters signify areas on the chart where there are unfulfilled orders, which can act as magnets for price movement.

With more liquidity positioned above the market's current price, MYX could be setting up for an upward move to fulfill these orders.

MYX liquidation chart Source: CoinGlass

This perspective is further strengthened by the predominance of long positions in the perpetual market, making a case for a possible recovery. Currently, the recent downturn appears to be more of a corrective phase, with a high likelihood of a recovery ahead.

Final Thoughts

In summary, while MYX has faced a temporary setback, market conditions suggest that there is still room for optimism. The active participation of buyers, coupled with ongoing growth in on-chain activity and liquidity metrics, may pave the way for a potential rebound.