Why this Layer 2 token towers over MATIC, OP, ARB and MNT in YTD performance
- ImmutableX showcases a year-to-date return of 227%.
- None of the other Layer 2 tokens like Polygon, Optimism, Arbitrum or Mantle display triple-digit gains.
- With the exception of Optimism, which has returned 79% YTD gains, the rest of L2 tokens are in the negative.
Crypto markets are enjoying a free reign of massive rallies. While it might seem like all altcoins are exploding, a closer look reveals that only a select few tokens are enjoying the lion’s share of capital inflows.
Read more: Three altcoins that are likely to crash next week and here is why
ImmutableX reigns supreme over other Layer 2 tokens
They say a “rising tide lifts all boats”, but in the crypto ecosystem, at least, not all the boats are rising the same. The chart below shows how ImmutableX’s IMX token has rallied a whopping 227% since the start of 2023, while other tokens that belong to the Layer 2 category have seen relatively tame gains in comparison.
IMX, OP, MATIC, MNT, ARB YTD performance
Here are a few reasons for this skewed performance:
Relativity: During times of high activity, investors tend to focus more on altcoins with events that have a lasting impact. For example, in a previous token-unlock event, ImmutableX shed 1.22 million IMX tokens every day for 28 days. Starting from December 1, 2023, a similar unlock of 1.22 million IMX will happen for another 28 days. Traders tend to front-run these events, which leads to massive rallies.
Narrative: Another reason why some sectors of altcoins rally massively compared to others is narrative. During the meme-coin phase, any and all meme coins saw massive capital inflows. Likewise, there has been a spike in interest in Artificial Intelligence, gaming and Zero Knowledge technology. Since IMX caters to all three of these sectors, the token seems to be more relevant and has found willing bidders.
Newness: In crypto, newer coins of the same category are given more weight than older coins. While this is not so significant for IMX (the coin was founded in 2021), it is still a general factor.
All in all, ImmutableX price has shown incredible performance, but investors need to be wary of what comes next. The altcoin has rallied despite the recent influx of IMX tokens into circulation. But when the music stops, it could crash relentlessly.
With Bitcoin price showing sell signals, it is likely that this correction might happen sooner rather than later.
Also read: Bitcoin Weekly Forecast: ETF delay and weekly swing failure could crash BTC to $30,000
ImmutableX price in trouble
ImmutableX price currently trades around $1.30 but risks a correction to the immediate weekly support levels at $1.14 and $1.10 – an up to 15% correction. This move would allow the Relative Strength Index (RSI) to reset and give the sidelined buyers an opportunity to accumulate.
The short-term outlook is bearish, no doubt, but the long-term expectation remains bullish. So, despite the steep correction, IMX could climb to new highs.
Hence, a bounce off the $1.14 to $1.10 support level could see IMX price overcome the March 2023 highs at $1.59 and eye a retest of the $1.97 level, which is the midpoint of 158% rally witnessed in March 2022.
IMX/USDT 1-week chart
On the other hand, if the selling pressure piles up, flipping the $1.10 support level into a resistance barrier it would be a signal to be cautious. In such a case, IMX could crash around 23% and encounter the $0.837 support floor, where buyers could give the uptrend another go.
Author
Akash Girimath
FXStreet
Akash Girimath is a Mechanical Engineer interested in the chaos of the financial markets. Trying to make sense of this convoluted yet fascinating space, he switched his engineering job to become a crypto reporter and analyst.
