Should You Buy Injective (INJ) After 12% Price Drop? Expert Insights
Injective Protocol (INJ) Faces Significant Selling Pressure Amid Record User Returns
Surge in Returning Users Signals Market Activity
Recent data indicates that the number of returning users for Injective Protocol (INJ) has reached an unprecedented peak, coinciding with a notable trend of users liquidating their holdings. Despite this, a segment of investors remains optimistic about INJ’s potential, continuing to accumulate the asset.
In the last 24 hours, INJ has experienced a sharp decline of 12%, marking one of the steepest losses in the cryptocurrency sector at the time of reporting. This downturn appears to be largely influenced by the influx of seasoned users back into the market, who are typically known for their aggressive trading strategies. Their re-entry during a price drop suggests that long-term holders may be offloading their assets.
Understanding the Current Selling Dynamics
The past day has seen a significant rise in returning users, with the count reaching 57,700—an all-time high for the year. These individuals, often characterized as long-term investors and active traders, tend to re-engage with the market after previous investments, frequently leading to aggressive trading behaviors. Their presence amid INJ’s price decline indicates that some high-conviction holders are choosing to sell.
Conversely, new user engagement has sharply decreased, with only 512 newcomers entering the market. This trend suggests that while veteran investors are selling, potential new participants perceive INJ as a high-risk investment and are hesitant to enter.
Opportunistic Buying Amid Price Decline
Despite the selling pressure, both DeFi and non-DeFi investors view the recent price drop as an opportunity to buy. Collectively, they have invested approximately $1.36 million in INJ, with DeFi investors alone contributing $520,000, which has been allocated to liquidity pools.
This trend is reflected in the Total Value Locked (TVL) in the protocol, which increased from $33.9 million to $34.42 million within a single day. Additionally, in non-DeFi sectors, there has been a robust accumulation, as evidenced by $840,000 worth of INJ being withdrawn from centralized exchanges.
This growing trend of accumulation indicates a long-term investment perspective, with DeFi investors locking their assets in protocols while spot traders are moving tokens from exchanges to private wallets.
Future Price Movements for INJ
As both bearish and bullish indicators emerge, analysts have examined the Liquidation Heatmap to gauge potential price movements. This tool, which tracks price shifts based on liquidity levels, suggests that INJ may be poised for a significant movement soon.
Currently, a major liquidity pocket has been identified above the existing price, which could potentially drive INJ up to $11. However, the highest concentration of liquidity is observed around $10.1, as indicated by the yellow Supertrend line. If INJ adheres to its historical trends, it may rally to this level despite the ongoing selling pressure from returning users.
