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GMX’s growth in TVL is a matter of joy, but there’s a caveat

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  • GMX’s registered a year-to-date growth of 43% in its total value locked.
  • The network growth fell considerably over the last month.

According to DeFiLlama, GMX whizzed past competition to become the top derivative exchange in terms of total value locked (TVL).

GMX’s year-to-date growth in TVL was promising as it jumped 43% to the press time value of $1.08 billion, surging well ahead of the second-placed dYdX.

Is your portfolio green? Check the GMX Profit Calculator

TVL growth outpaces user growth

Though there has been substantial growth in TVL, the overall trading activity on the DeFi protocol left a lot to be desired.
As per Token Terminal, the weekly trading volume on the platform declined sharply from $2.4 billion in mid-February to about $1 billion by the end of the month.
The weekly average daily active users registered a drop of over 20% from the last week.

Source: Token Terminal

This implied that network activity was significantly less when compared to its TVL.

Another way of looking at this was the low Market Cap to TVL Ratio of GMX, which stood at 0.52, at the time of writing. This meant that the project was undervalued and there was scope for further investments.

GMX could go downhill?

GMX’s network growth fell considerably over the last month, signaling that new addresses stayed away.

One reason could be the declining profitability of the network as revealed by the falling MVRV Ratio. The prospect of fewer returns on the holdings could have dissuaded new users from adopting GMX.

As a result of these factors, investors’ sentiment turned negative towards the latter part of February.

Source: Santiment

How much are 1,10,100 GMXs worth today?

At the time of writing, GMX was down 1.45% in the 24-hour period, as per CoinMarketCap. The price retreated more than 20% since hitting its all-time high of $84 on 18 February.

The Relative Strength Index (RSI) dropped steadily in the same time period and rested below neutral 50 at press time. The Moving Average Convergence Divergence (MACD) was in danger of slipping into a bearish zone.

The indicators suggested a bearish outlook for the coin. A dip below the indicated support level at $63 will validate this bias.

Source: Trading View GMX/USD

 

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Saman Waris works as a News Editor at AMBCrypto. She has always been fascinated by how the tides of finance and technology shape communities across demographics. Cryptocurrencies are of particular interest to Saman, with much of her writing centered around understanding how ideas like Momentum and Greater Fool theories apply to altcoins, specifically, memecoins. A graduate in history, Saman worked the sports beat before diving into crypto. Prior to joining AMBCrypto 2 years ago, Saman was a News Editor at Sportskeeda. This was preceded by her stint as Editor-in-Chief at EssentiallySports.
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