NEW DELHI (CoinChapter.com) — Metis DAO (METIS) is among several small-cap crypto tokens that enjoyed a major price rally during the last quarter of 2023. However, METIS price action became almost parabolic after Dec. 18, rallying nearly 350% to reach $98 on Jan. 2.
MetisDAO is an Ethereum Layer-2 scaling solution that addresses the blockchain trilemma of decentralization, security, and scalability. Like other Ethereum L2 solutions, investors remain positive about the platform’s prospects in 2024.
Key Drivers Behind Surge
One of the central forces behind METIS price’s December bull run is the creation of a 4.6 million METIS tokens fund to accelerate the growth of the Metis ecosystem.
The Metis Ecosystem Development Fund will help speed up the development of new projects, drive activity, and promote the adoption of the L2 blockchain.
MetisDAO plans to distribute funds in the first quarter of 2024 and has invited developers to build projects related to NFTs, DeFi, Severlasmart contract development, etc.
Investors and analysts viewed the launch of the MetisDAO fund as a bullish cue, especially with the upcoming launch of the Metis decentralized sequencer.
A sequencer is a vital L2 component that aggregates multiple transactions from users and then submits a summary to the decentralized mainnet. Apart from the excitement surrounding MetisDAO’s ecosystem fund, the recent growth of the blockchain platform has been impressive.
Metis noted that the platform ended 2023 with the 3rd highest TVL among Ethereum L2 protocols. Furthermore, traders and users expect rewards from the ecosystem fund to benefit them as more apps launch on Metis.
The impressive performance of other Metis ecosystem projects, like Maia and Hermes, has also helped push METIS’s price upwards.
Moreover, attractive liquidity pool rewards and a surge in trading volumes in decentralized trading protocols like Tethys showcase growing interest in the MetisDAO ecosystem.
METIS Price Rally: Exhausted Or Consolidating?
METIS price rally is currently in a holding pattern above the $79 support level as bears continue booking profits. Additionally, the relative strength index for METIS remained overbought, with a score of 73.06 on the daily charts.
Overbought RSI levels often precede an asset’s consolidation or correction phase, which is why traders often consider the occurrence a bearish signal.
As such, METIS’s price risks testing its 20-day EMA (red wave) support near $59 if the sell-off continues. However, given the positive market sentiment, it is likely that METIS’s price is consolidating before targeting the resistance near $109.6.
Breaking above the immediate resistance might help METIS price rally to the resistance near $140 before retreating.
