The layer-two scaling solution for NFTs on the Ethereum smart contract network is called Immutable X (IMX). It enables NFT traders and creators to execute quick transactions with almost no gas costs. Early in 2023, when interest in NFTs once again grew, IMX became more well-known. Critical on-chain metrics show that IMX appears to be struggling to find new demand, though the NFT boom is now slowing.
According to data from Santiment’s on-chain, fewer new addresses are being created on the IMX network. As can be seen below, on March 17 both network expansion and price reached their peaks. Since then, the number of newly created addresses has decreased from 594 to 84 as of March 24.
A persistent decline in network growth is a bearish sign that the underlying token may have trouble generating new demand. Therefore, the current decline in network traction may harm IMX’s growth prospects in the coming weeks.
Further supporting the pessimistic outlook is the long-term holders of IMX’s profit-taking frenzy. Long-term holders appear to have started selling since early February, as shown by the red line in the chart below. The IMX Mean Coin Age (90d) has decreased from 60.43 on February 2 to 28.78 as of March 24 in the Santiment chart below.
The average number of days recently traded tokens spent at their previous addresses is calculated using the Mean Coin Age (90d) metric. A downward trend typically signals that long-term holders of the native token are under pressure to sell.
In the end, other cryptocurrency investors may panic and cause a further decline in the price of Immutable X if long-term holders continue to sell at the current rate and Immutable X cannot find new demand.
The Global In/Out Of Money (GIOMAP) data gathered by blockchain forensics company IntoTheBlock indicates that the price of IMX may soon fall below $1. If Immutable X doesn’t maintain a price above the $1.05 support area, where 2,550 addresses had purchased 664 million IMX coins, it might fall below $1. If this support level is not maintained, IMX could decline even more and reach $0.83. Another 4,000 addresses that purchased 588 million coins can alleviate the slump in this case.
However, if IMX breaks above $1.33, the highest price that 2600 addresses paid for 32 million coins, the bulls invalidate the downswing. If the $1.33 resistance is overcome, IMX may continue to rise for a while, reaching $1.66, where an additional 3,400 addresses had purchased 14.5 million coins.