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Decentraland (MANA) Loses Traction as Investors Panic, Will the Price Drop Further?

2 mins
Updated by Ryan Boltman
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In Brief

  • Decentraland traction plunges 76% as Daily Active Addresses decline for the third consecutive month.
  • The growing divergence between Price and Daily Active Addresses raises concerns among investors. 
  • A strategic whale cohort has offloaded MANA worth $30 million in the past month.
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Decentraland (MANA) has delivered a flat price performance in the past week. On-chain data reveals that investors are growing weary of the declining user acquisition on the metaverse project. Will whale investors dumping their bags trigger more MANA downsizing? 

Decentraland is Losing Traction

Decentraland is an Ethereum-based virtual reality project that allows users to monetize their content creation and gaming experience. Over the last 10 days, the native token MANA has declined by 15%. On-chain data reveals a link between the recent price slump and the persistent drop in the Decentraland user base growth rate. 

According to the blockchain analytics platform Glassnode, the number of new users joining the metaverse project has declined steeply since mid-January. 

As shown below, 1,069 new MANA addresses were created in January. However, as of March 30, that figure had dwindled to 381, representing a 64% decrease in traction. 

Decentraland (MANA) New Addresses, March 2023.
Decentraland (MANA) New Addresses, March 2023, Source: Glassnode

A decline in new users could indicate that the metaverse project is losing market share to competitors. While the price has only declined 15% from its recent local high of $0.67 on March 18, the 64% drop in new users could raise serious concerns among crypto investors.

The recent sell-off among Decentraland whales further confirms this bearish outlook. According to Santiment, a strategic cohort of crypto whales have been offloading significant units of MANA in the past month. 

Following a month of growth decline, the cluster of whales with balances of 1 million to 10 million MANA began to deplete their holdings. The chart below shows that they dumped 53 million tokens worth approximately $30 million between Feb 21 to March 31.

Decentraland (MANA) Whale Supply Distribution, March 2023
Decentraland (MANA) Whale Supply Distribution, March 2023, Source: Santiment

When crypto whales sell off their tokens, it could spook the sharks and other retail investors into becoming bearish themselves. Notably, this cluster of whales holds about 33% of the total Decentraland circulating supply. If they continue to drop their bags at the current rate, it could severely impact the price of MANA.

MANA Price Prediction: Drop to $0.46 is Likely

IntoTheBlock’s Global In/Out of Money (GIOM) chart shows that, with only 45.78% of MANA holders currently profitable, the Decentraland market is largely bearish and likely to decline further.

As shown below, MANA appears likely to lose its current support at $0.55, the minimum price that 8,500 addresses had paid for 132 million tokens. If that happens, MANA could enter a free fall toward $0.46, where another 20,700 addresses holding 303 million tokens can offer support. 

Decentraland (MANA) Global In/Out of Money data. March 2023.
Decentraland (MANA) Global In/Out of Money data. March 2023, Source: IntoTheBlock

Still, the bulls can seize the market if MANA breaks above $0.60, the maximum price the resistant 8,500 addresses paid for their 132 million tokens. After that, MANA could rally toward the next significant resistance zone at $0.70. At that zone, the 32,000 addresses holding 512 million MANA tokens may look to take some profit. 

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Ibrahim Ajibade
Ibrahim Ajibade Ademolawa is an experienced On-chain research analyst who began his career in Commercial Banking. He has worked with several Web3 startups and financial institutions —analyzing technical concepts and spectacular events that link the DeFi and TradFi worlds. He holds a Bachelors’ Degree in Economics and is currently pursuing an MSc. in Blockchain & Distributed Ledger Technologies.