How Low Can Injective Protocol (INJ) Go After 3,000% Rally?

YEREVAN (CoinChapter.com) — Injective (INJ) price dropped 6% to $40 on Dec. 21, with several factors hinting about a continued selloff in the coming days or weeks. How low can the Injective token go if the price keeps falling? Let’s look at the technicals and the on-chain metrics to understand further.

Injective Price Correction to Continue: How Low Can It Go?

As CoinChapter reported, the INJ price increased above $38, a key resistance level. The cryptocurrency peaked at an all-time high of $43 on Dec. 20, despite Bitcoin and Ethereum momentum setbacks. The overall INJ price year-to-date (YTD) returns were around 3,000%.

Several factors drove the DeFi token price higher in 2023, including a massive surge in Perpetual Futures trading. Traders seeking gains through leverage accelerated the rally. However, the price shows signs of exhaustion as investors book profits.

Profit booking is mainly due to Injective’s daily relative strength index (RSI), which has been “overbought” for several sessions. The Injective price cooled off in the previous three occasions of an overbought RSI, before another leg up. If the past is any indication, the current correction could continue.

If the INJ price correction continues, a likely short-term target will stand at $37, or another 6% lower than the current value.

INJ Bulls Taking a Break

The Total Value Locked (TVL) in Injective is about $25 million, according to DeFiLlama, a record high for the protocol. As CoinChapter reported earlier, Into The Block reported none of the INJ holders have suffered losses as of Dec. 18. While 87% were in profits, about 13% were breaking even.

Such a high percentage of wallets in profit generally indicates a looming selloff, which is currently in progress.

Additionally, about 95% of the tokens are held by whale wallets (defined as those owing more than 1% of the circulating supply). This is risky as it increases the possibility of market manipulation. The Injective price correction indicates that Whales decided to dump their tokens to cash out profits partially.