GMX, the native token that powers GMX, a decentralized perpetual exchange for complex crypto derivatives trading, is under intense selling pressure as of writing on August 11.
Trackers show that management token decreased 7% on the last trading day, pushing the monthly loss to 24%. This decline saw prices fall close to $40, a critical support level that was last printed in January and June 2023.
Dumping Whales, Dropping Prices
Despite this setback, the DeFiLlama data is solid as GMX’s Total Value Locked (TVL) remains over $534 million. Most of the trading platform’s liquidity is locked in Arbitrum, a layer-2 scaling solution for Ethereum. In addition, another part is locked in Avalanche, a fourth-generation Ethereum-compatible smart contract platform focused on decentralized finance (DeFi).
The sale on August 11 together with GMX actions “whales.” According to Lookonchain data, four whales sold 62,274 GMX worth $3 million. The address “0xb824” liquidated 19,786 GMX, which translates to 514 ETH, and “0xa38a” sold 11,667 GMX for 305 ETH, losing $50,000 in the process. Meanwhile, “0X85b7” traded 20,000 GMX for 510 ETH, and “0x0b80” mirrored this move, dumping 10,820 GMX.
Whales sell amid ever-decreasing TVL in DeFi. This decline can be traced to the general cool-off from late 2021, when crypto prices rose before falling in 2022, crashing on-chain activity, especially in DeFi. At spot rates, it changed hands at $46, an almost 50% decrease from the $91 registered in Q2 of 2023. However, the token has risen almost 4X from its all-time low.
The whales’ action, however, could send ripples of uncertainty throughout the GMX and DeFi communities. Crypto traders are actively tracking whale activity. Often, when they sell, as is the case now, it can sow fear, which will lead others to follow suit, adding more pressure on prices.
GMX Launches v2 Beta
On August 6, GMX released the v2 beta version of Arbitrum and Avalanche. The exchange says that this version introduces many improvements, including support for multiple assets, including XRP. With v2, users can also use different types of collateral for trading positions while trading faster with reduced fees and lower slippage.
With v2, the exchange added, is the introduction of isolated pools for liquidity providers to adjust their exposure to the desired tokens. This version also includes additional incentives for balancing open interest, which offers a strategic path for the hedging pool against changes in the trader’s profit.
Feature image from Canva, chart from TradingView