Over the last few months, a slew of scaling solutions have been released, ranging from Arbitrum to Optimism, and there is still no end in sight. Individual networks have reaped the benefits of the launches, with OMG being the most recent.
OMG is a non-custodial L2-scaling platform that employs optimistic rollups to boost Ethereum’s scalability. It recently partnered with Enya, the Boba network’s creator. Boba, as an L2 solution, aims to lower gas costs, increase transaction throughput, and expand smart contract capabilities.
In fact, the amount locked on this network has increased by 209.78 percent in the last seven days, the most of any major L2 solution. Enya, in particular, built the Boba Network as a key contributor to the OMG Foundation, which is why the native OMG token has benefited from Boba’s recent strong performance.
OMG, like all other coins, managed to pull off a rally in April-May, but was caught in the middle of May’s crash. After a brief pause in June-July, the alt resumed its broader uptrend and has since rallied by more than 390 percent. The northbound strides, on the other hand, have only recently become more prominent. At press time, the alt was trading very close to its $15.3 ATH.
Is there no going back?
Isn’t it true that the price chart’s consistency makes this alt a compelling choice? Unfortunately, there is a downside that market participants should be aware of. The state of the metrics has shifted recently, and the overall trend is bearish.
Take, for example, the Price DAA Divergence. This model examines the relationship between the price of the coin and the number of daily addresses that interact with it. When the DAA rises in tandem with the price, this is a buy signal. When active addresses fall during a price hike phase, however, selling pressure is induced.
However, over the last few weeks, the charts have shown a bearish projection, indicating that the active addresses are not in good shape.
The supply on exchanges has also increased recently, indicating a lack of buying momentum. Only when this metric falls below zero indicates that coins are being transferred from exchanges to private wallets. As a result, if buyers continue to show little interest in altcoins, the rally will be short-lived.
The dormant circulation has decreased even more. This metric, for example, has dropped from 5.21 million to 109k in the last three weeks, indicating the movement of old tokens. When coins are dormant, it means the accumulation trend is still active. The current trend, however, suggests that strong hands are selling at strength.
Considering the current state of the aforementioned metrics, it is possible that OMG will experience a pullback in the coming days. If only the buying pressure box is ticked, however, a ripple will occur, improving the state of most metrics. As a result, the broader environment will be able to support the alt’s long-term rally.