LOOKS - Are we starting a new wave?
Asset covered: LooksRare (LOOKS)
Metrics: Price, Supply on Exchanges, Active Deposits, Active Withdrawals, Dev activity, MVRV 7D
The cryptomarkets found its relief rally following March's FOMC meeting. LOOKS has gone +175% since and it is still following very closely to how BTC and ETH reacts.
We are also seeing huge volume coming in this week, which saw price pushing higher (looking healthy so far).
What we don't want to see is a a divergence of price and volume (higher price with low volume).
Supply on Exchanges
LOOKS supply on exchanges saw consistent huge inflow since 7th March until 15th March (around FOMC meeting).
Since then, a downtrend in Supply on exchanges is observed, which naturally saw price take off as sell pressure is alleviated. That said, this week saw some consistent inflow to exchanges, indicating that folks are selling into the rally.
Active Deposits and Active Withdrawals
Since a LOOKS token holder is highly incentivized to stake LOOKS for the rewards, it's worth looking at how deposits and withdrawals to exchanges can help us get an idea of the sentiment around the token.
LOOKS' Active Deposits is seeing some spikes lately with the price rally as some market participants begin to take profits. Given that number of Active Deposits are quite low at 84, and supply on exchanges grew quite a bit, it may suggest that these are holders with larger amounts as compared to the retail crowd.
LOOKS' Active Withdrawals is seeing huge spikes following the price rally as well. However, it's important to note that the number is pretty huge compared to Active withdrawals.
E.g on 30th March, there were 4934 Active Withdrawals compared to 84 Active Deposits.
Majority of the market participants are clearly showing strong confidence in the token and remain rather bullish at this stage.
LOOKS' development activity has been pretty quiet since their launch, and it wasn't until 14th March 2022 that we saw a spike, which indicates that something is brewing and coming soon.
One of the developments seem to be the LOOKS compounder with higher APY (where WETH is automatically converted to LOOKS)
Some keen-eyed folks probably used this as a speculative opportunity and it clearly paid off, seeing how spikes in dev activity preceded the price rally for both times.
LOOKS's MVRV 7D which measures the short-term profit/loss of holders is showing that we have entered the danger zone, which historically saw short-term holders who are well in profit....take some off the table.
A drop in price and MVRV in coming days to establish a local top would help make for a good reset and opportunity.
Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.
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