GMX, the native token that powers GMX, a decentralized perpetual exchange for trading complex crypto derivatives, is under heavy selling pressure as of August 11 writing.
Followers show that the governance token is down 7% on its last trading day, pushing monthly losses to 24%. This downturn has pushed prices down to close to $40, a critical support level last pressed in January and June 2023.
Dump whales, prices fall
Despite this setback, DeFiLlama’s facts is stable as GMX’s Total Value Locked (TVL) remains over $534 million. Most of the trading platform’s liquidity is tied up in Arbitrum, a layer-2 scaling solution for Ethereum. In addition, another portion is locked to Avalanche, a fourth-generation Ethereum-compatible smart contract platform focused on decentralized finance (DeFi).
The sale on August 11 coincides with actions from GMX “whales”. According to data from Lookonchain, four whales sold 62,274 GMX worth $3 million. Address “0xb824” liquidated 19,786 GMX, which translated to 514 ETH, and “0xa38a” sold 11,667 GMX for 305 ETH, losing $50,000 in the process. Meanwhile, “0X85b7” sold 20,000 GMX for 510 ETH, and “0x0b80” mirrored this move, dumping 10,820 GMX.
Whales are being sold as the TVL in DeFi is constantly falling. This contraction can be traced to the general cooling from late 2021, when crypto prices peaked before falling in 2022, crashing on-chain activity, especially in DeFi. At spot rates, it changes hands at $46, down nearly 50% from $91 recorded in Q2 of 2023. Still, the token is up nearly 4x from its all-time low.
Whales’ move could nevertheless create uncertainty in the GMX and DeFi communities. Crypto traders are actively tracking whale activity. If they sell, as they did now, it would usually create fear, leading others to follow suit, putting even more pressure on prices.
GMX launches v2 Beta
On August 6 GMX issued the v2 version in beta on Arbitrum and Avalanche. The exchange said that this version introduces several improvements, including support for more assets, including XRP. v2 also allows users to use different types of collateral for trading positions, while trading faster with lower costs and less slippage.
With v2, the exchange adds, is the introduction of isolated pools for liquidity providers to adjust their exposure to preferred tokens. This version also includes enhanced incentives for balancing open interest, providing a strategic way to hedge pools against fluctuations in traders’ profits.
Feature image from Canva, chart from TradingView