dYdX price could crumble under pressure from rising exchange reserves

• dYdX price gains may be unsustainable as the asset gears up for a token unlock event on November 21.
• dYdX whales increased their activity, there is a spike in transactions valued at $100,000 and higher. 
• The trade volume of dYdX hit a three-month peak early on Monday, as holders gear up for potential crash. 

dYdX token holders are gearing up for the upcoming unlock event on November 21. The governance token has noted a spike in whale activity and it remains to be seen whether the transactions will trigger a decline in the asset’s price.

Also read: Optimism price rally gets boost from OP token accumulation

dYdX on-chain metrics support price gains

There is an increase in dYdX active addresses and trade volume for the token, based on data from crypto intelligence tracker Santiment. Network Growth has also risen. These metrics measure the activity of market participants and help determine the direction of the asset’s price trend. Previous spikes in these metrics have been accompanied by a price increase, therefore the data supports a bullish thesis for the governance token. 

Network Growth and Volume of dYdX

Active Addresses of dYdX

Other on-chain metrics supporting dYdX gains is Network Realized Profit/Loss (NPL). As seen in the chart below, NPL observed a large spike on November 7, this can be interpreted as a large volume of traders realizing losses and shedding their dYdX token holdings. When combined with no active profit-taking by whales, this metric could be bullish for dYdX price. 

NPL in dYdX

The short-term outlook on dYdX price is bullish according to the above metrics. However, the upcoming token unlock event and token distribution by whales could increase the selling pressure on the asset. 

dYdX token unlock event

According to info from token.unlocks.app, a dYdX unlock event is scheduled for November 21, 2.16 million tokens, worth $6.69 million are set to enter circulation. When combined with the rising supply on exchanges – an addition of 6.87 million dYdX tokens in the past two weeks – this points at an impending correction in dYdX price.

The governance token could face intense selling pressure across exchanges. The long term price gains of dYdX remain uncertain as whales engage in distribution of the tokens. Three tiers of whales holding between 10,000 to 10 million dYdX tokens have engaged in shedding their holdings and distributed these tokens.

Typically, this could point at profit-taking and add to the selling pressure on the asset.
 

Whale distribution of dYdX tokens

In the short-term, dYdX price gains are likely sustainable, however the long-term outlook is bearish when token unlock and whale distribution is considered. The unlock event on November 21 could trigger a crash in the asset’s price.

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