Is Mantle due for a dip? – Analyzing why MNT’s pullback is likely

Key Takeaways

MNT surged 21% in a week, driven by whale accumulation and bullish futures sentiment. Despite RSI cooling, strong buying and positive funding rates suggest potential for further upside.

Mantle [MNT] has traded within an ascending channel since its breakout from a multi-month downtrend last week. 

On daily charts, the altcoin surged from a low of $0.72 to a 2-month high of $0.85. After reaching these levels, MNT faced a solid rejection, leading to a retracement. 

As of this writing, Mantle was trading at $0.7817, representing a 21.47% increase over the past seven days. 

But MNT remains resilient despite rising market volatility. 

Whales lead the charge 

According to CryptoQuant, whale traders have dominated the market over the past 30 days, positioning the altcoin for a potential price rally. 

Thus, the recent uptick can be attributed to a month-long accumulation by whales. This market scenario is evident in the fact that the Spot Average Order Size has been dominated mainly by large orders.

When large holders dominate, it suggests that whales are aggressively participating in the spot market. 

MNT has shown sustained buying activity, according to exchange flow data. 

CoinGlass reports a Spot Netflow of -$4.3 million, indicating that more MNT is being withdrawn from exchanges than deposited.

This negative netflow suggests ongoing accumulation, as traders move tokens into private wallets, often a bullish signal.

Often, when Netflow remains negative for an extended period, it suggests that most active market participants are accumulating.

Historically, a higher buying spree has acted as a recipe for a price rally. 

Futures are even more bullish 

Interestingly, when we examine the derivatives market, we determine that most investors have entered the market to take a long position. 

For starters, Mantle’s Open Interest jumped 9.2% to $28.8 million, at press time, while volume surged by 285% to $47.8 million.

Such a spike in these two metrics reflects increased capital inflow in the futures market. 

As a result, the altcoin’s Funding Rate has continuously held within positive territory. At press time, Funding Rate was around 0.01, confirming a higher demand for longs. 

Longs accounted for 75%, while Shorts represented 24% of the total futures position. Typically, a higher demand for longs implies that investors are actively betting on prices to rise. 

Is MNT’s upswing short-lived?

According to AMBCrypto’s analysis, Mantle recorded a strong upswing amid sustained accumulation from whales. 

As a result, the altcoin’s Relative Strength Index (RSI) surged to the overbought zone, sitting at around 73, as of writing.

Likewise, the altcoin’s Chaikin Money Flow (CMF) hovered within a positive region, further confirming the presence of buyers. 

However, with the RSI dropping from 76 to 73 signals weakening buyer momentum, which explains the sharp price drop observed on the daily charts. 

That said, to maintain the upward momentum, buyers need to regain strength and displace the creeping sellers. If they do, Mantle will reclaim $0.80 and target $0.87. 

However, failure to do so, MNT will decline to a low of $0.70.