Mantle's MNT token has recently experienced significant volatility. After weeks of impressive gains, the asset witnessed a sharp decline. This shift has prompted questions about its immediate future and potential recovery pathways.
Market Downturn and Liquidity Outflow
MNT's recent 9% price drop followed a period of substantial growth. This decline is largely attributed to a shift in investor sentiment from long-term holding to a short-term outlook. Total Value Locked (TVL) on MNT has fallen by 2.22% in just 24 hours, nearing its all-time low. The derivatives market mirrors this bearish trend, with a drop in Open Interest and a Taker Buy-Sell Ratio indicating strong selling pressure. This suggests that many investors are anticipating further price decreases for the asset.
Spot Investors Offer a Counterbalance
Amidst the widespread selling, a contrasting dynamic has emerged from spot investors. Over the past week, these traders have collectively accumulated over $60 million worth of MNT. This includes $7.57 million in purchases within the last 24 hours alone. This influx from off-chain investors suggests a long-term holding perspective, distinct from the short-term selling observed on-chain. While this significant accumulation hasn't yet reversed the price trend, a sustained increase in these buy orders could potentially offset the prevailing bearish pressure.
Potential for a Bullish Reversal
Despite the recent downturn, analysis indicates that a bullish setup for MNT remains a possibility. The current market structure, with liquidity clusters both above and below the present price, could act as future demand zones. It is anticipated that MNT might trade lower to clear these liquidity clusters. This movement could then trigger a rebound. Should this scenario unfold, MNT could rally significantly. A potential target for this upward movement is $1.5, where a large upper liquidity cluster is located.
