Key Takeaways:
- Injective Protocol’s INJ token up over 1,000%.
- On-chain metrics show large whales hold 90% of the coins.
- What incentivized the whales?
YEREVAN (CoinChapter.com) — Injective (INJ) soared over 1,100% year-to-date, peaked at a two-year high of $15 on Nov. 1, and backed to $14.6 on Nov. 2 after a 7% intraday slide. Considering the impressive soar, let’s dive deeper into the coin’s technical and on-chain metrics to see whether the rally is sustainable.
INJ Token Price Drops in ‘Overbought’ Correction
INJ price has been charting through an ‘overbought’ territory since Oct. 19, meaning the coin’s relative strength index (RSI; purple graph) sustained above 70. In other words, the Injective bulls kicked the coin above its ‘fair’ value, as an RSI above 70 generally indicates a profitable market exit point.
The chart above shows considerable growth in trading volumes (vertical bars at the bottom), which likely fed the price uptrend. Considering the still-‘overbought’ RSI, the short-term target for INJ would stand at a former resistance of $13.9-14 in the coming sessions if the bulls decide to secure profits further.
However, technicals alone do not shed light on the long-term picture. So, let’s look at the on-chain metrics and fundamental Injective news.
Whales are Driving Injective Upward
According to on-chain data provider Santiment, small INJ holders, or shrimp wallets, have accumulated throughout 2023. Crypto brokerage K33 also reported similar results in its Injective research, claiming that “traders with a smaller portfolio are greatly incentivized” to look into “ecosystems other than Ethereum L1.”
However, the lion’s share of the tokens lie in large wallets, otherwise known as whales. As of Nov. 2, whales held nearly 90% of all INJ, up from 86% in mid-August. Such centralized power could leave the shrimp accounts more vulnerable to potential market manipulation.
The transaction log confirms the suspicions, showing a concentrated peak in transactions of over $100,000 (yellow) and $1 million (red) parallel to the price surge in the previous two weeks.
However, the question remains: what pushed the whales into a frenzy?
Blockchain Development on the Rise
In early 2023, Injective announced a $150 million ecosystem initiative to develop interoperable infrastructure and DeFi. As a result, Injective got funding from large players in the game – venture capitals Pantera Capital, Jump Crypto, and Delphi Labs.
Moreover, on Oct. 24, the team introduced Injective Nexus – an integration with Google Cloud that will offer BigQuery datasets for the platform. This puts Injective a step higher, as Bitcoin and Ethereum are the other two major blockchains with such integration.
The mentioned efforts resulted in a development activity rise, which often translates to user trust and, in turn, to higher INJ prices.
In conclusion, Injective Protocol will likely experience another leg up before the year’s end, based on growing development and still-hot whale interest. However, a correction could be in order before that happens, and shrimp traders should take the highly centralized nature of the protocol into account before parking their hard-earned cash with INJ.
