MYX Finance (MYX) fell 11% on January 5th, primarily due to profit-taking in the perpetual contract market, not a wave of forced liquidations, while various data points still indicate buying pressure and a high potential for recovery.
The correction occurred when sellers temporarily gained the upper hand, but indicators such as a positive Funding Rate, increasing TVL, and improved on-chain activity suggest that bullish sentiment has not been completely broken, making a rebound scenario still noteworthy.
- MYX fell 11% due to profit-taking on perpetual contracts, while liquidations totaled only $1.02 million.
- Funding Rate (based on Open Interest) remains positive, TVL has increased by approximately $720,000 since January 1st.
- The heatmap shows that the liquidation cluster is mostly located above the price, reinforcing the scenario that the price could sweep upwards.
MYX prices fell primarily due to profit-taking in the perpetual market.
The recent decline is linked to strong profit-taking on perpetual contracts, reflected in a decrease in Open Interest of approximately $16.7 million, while total liquidation amounted to only $1.02 million.
The downward momentum emerged when market conditions tilted toward sellers on January 5th, causing the MYX to drop by approximately 11%. However, trading data shows that buyers remain active, meaning the probability of a rebound has not been eliminated.
A key indicator comes from the drop in Open Interest (OI) of approximately $16.7 million, reflecting a significant contraction in the total value of open MYX positions in the perpetual market. A decrease in OI typically occurs when traders close positions, especially in the context of profit-taking after a previous upward movement.
Despite the large outflow of open Capital (OI), the total liquidation amounted to only about $1.02 million, implying that most positions were not "swept" due to stop-loss orders being triggered. Based on the data logic, the remaining approximately $15.68 million in positions were likely closed proactively, consistent with a profit-taking scenario, thereby creating short-term price pressure as the positions changed hands at lower price levels.
A positive funding rate indicates that bullish sentiment remains.
The Open Interest-weighted Funding Rate remained positive throughout the decline, indicating that the majority of open positions were still skewed towards the buy side despite the price correction.
A positive Funding Rate typically means that Longing positions are paying Short positions, reflecting a dominant demand for holding bullish positions. In the context of a declining MYX index but a positive Funding Rate, the market may be undergoing a technical correction rather than a full-blown psychological reversal.
on-chain activity increased slightly despite low protocol revenue.
on-chain activity recorded modest growth, with protocol revenue increasing from $5 to $18, while TVL continued to rise despite weak prices.
Protocol revenue remains relatively low, but the increase from $5 to $18 indicates a certain improvement in usage. Despite the small number, the upward trend is a signal to watch, especially in the context of continued TVL expansion.
Total Value Locked (TVL), a measure of the amount of liquidation committed to the protocol, continues to rise despite the decline in MYX. Since January 1st, TVL has increased by approximately $720,000, suggesting that a segment of users remains willing to Token Lockup to receive periodic rewards and pursue a long-term perspective.
Perpetual volume on DEXs has increased sharply.
Perpetual volume on decentralized exchanges surged, increasing by $66.24 million in 24 hours and reaching $1.936 billion in accumulated volume over the past 7 days.
Increased volume can reflect both hedging needs and opportunities to buy at the Dip/short-term when prices fluctuate. The surge in volume during a price drop sometimes accompanies a "repositioning" process, where traders close old positions and open new ones at a better price.
The cluster of liquidation above the price opens up a recovery scenario.
The liquidation heatmap shows many liquidation clusters above the current price, often Vai as " liquidation magnets" and potentially prompting MYX to attempt an upward pull to fill the remaining empty order zones.
Data from the liquidation heatmap on CoinGlass shows that liquidation clusters are largely concentrated above the current price level. In actual trading, these clusters represent unfilled order areas that tend to attract price movement as the market seeks liquidation.
When liquidation is "thick" at the top, the price has an incentive to sweep upwards to fill orders, especially if the perpetual market remains skewed towards Longing. The dominance of Longing also reinforces the argument that the recent decline may be a correction phase, while the potential for a recovery remains significant.
Conclude
The MYX decline was primarily due to traders actively taking profits in the perpetual contract market, rather than a mass liquidation.
- Open Interest decreased by approximately $16.7 million, while liquidation amounted to only $1.02 million, supporting the scenario of intentional position closure.
- Positive funding rates, increasing TVL, and activity indicators suggest that buyers still have a certain level of confidence.
- The cluster of liquidation above the price on the heatmap could support a price pullback scenario to "fill" the liquidation zone.
Frequently Asked Questions
Why did MYX drop 11% on January 5th?
Data suggests the primary cause was profit-taking in the perpetual contract market: Open interest decreased by approximately $16.7 million, while liquidations totaled only $1.02 million, indicating that the majority of positions were closed proactively.
What does a positive Funding Rate mean for MYX?
A positive funding rate usually reflects a majority of open positions leaning toward price increases (Longing are dominant). A positive funding rate during a price decline may imply a short-term market correction rather than a complete shift to a downtrend.
What does it mean when TVL increases while prices fall?
The TVL (Total Liquidity) has increased by approximately $720,000 since January 1st, indicating that there is still liquidation locked into the protocol despite price volatility, which is generally interpreted as continued confidence or demand for long-term participation.
How can a liquidated heatmap be used to forecast MYX prices?
Liquidation clusters on the heatmap are often concentrated order zones that can "pull" price. When liquidation is significantly above the current price, MYX may attempt to rise to sweep/fill these zones, depending on market conditions.
