According to DeFiLlama, GMX has surpassed its competitors to become the leading derivatives exchange in terms of total value locked (TVL).
GMX’s year-over-year TVL growth looks promising, growing 43% to $1.08 billion at press time, ahead of second-ranked dYdX.
TVL up but activity down
Despite the significant increase in TVL, the overall trading activity of DeFi protocols has not met expectations.
Weekly trading volume on the platform plummeted from $2.4 billion in mid-February to around $1 billion by the end of the month, according to Token Terminal.
The number of weekly average daily active users dropped by more than 20% from the previous week.
Source: Token Terminal
This means that network activity is significantly below its TVL.
Additionally, GMX has a low market capitalization to TVL ratio of just 0.52 at press time. This means that the project is undervalued and additional investment is possible.
Can the GMX go downhill?
GMX’s network growth slowed significantly last month, indicating that new addresses will no longer be available.
One potential reason is a decrease in the profitability of the network, as indicated by the decrease in the MVRV ratio indicator. The prospect of reduced stake profits may have deterred new users from adopting GMX.
Due to these factors, investor sentiment turned negative at the end of February.
At the time of writing, GMX is down 0.5% in 24 hours and is currently trading at $67. Since hitting an all-time high of $84 on February 18, the price has fallen more than 20%.
The relative strength index (RSI) has declined steadily over the same period and is below a neutral 50 at press time. The Moving Average Convergence Divergence (MACD) is in danger of slipping into bearish territory.
Indicators point to a bearish outlook for the coin. A break below the $63 support would validate the trend.
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According to AMBCrypto