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Worldcoin (WLD) has recently seen a notable 14.32% rise in the past two days of trading, offering a brief glimmer of hope to investors. However, this surge comes in the context of a much larger downward trend that has plagued the cryptocurrency since April. While Bitcoin (BTC) has also experienced a steady decline over the past few months, its losses, at 13.5%, pale in comparison to WLD’s staggering 80.51% drop since April 1.
The key support level of $2.17, which had previously held strong during Worldcoin’s 2024 lows before a February rally, was decisively broken in July, signaling deeper market troubles for the token. A potential sign of hope appeared with the formation of a falling wedge pattern, a bullish technical signal. However, experts remain cautious, noting that the pattern was not fully realized, dampening expectations for a strong reversal.
On-Chain Metrics Offer Mixed Signals
To assess whether Worldcoin’s recent surge is the start of a lasting recovery or just a fleeting moment of strength, a closer look at on-chain metrics offers some insights. Notably, the combination of the Mean Coin Age and the Market Value to Realized Value (MVRV) ratio has given a short-term buy signal.
The uptrend in the Mean Coin Age suggests accumulation is happening, as investors are holding onto their tokens for longer periods. Meanwhile, the 30-day MVRV ratio, which is currently in negative territory, indicates that short-term holders are operating at a loss. This typically points to a potential buy opportunity, as it suggests that the token is undervalued in the short term. However, caution is warranted.
A similar buy signal was observed in early July and again in early August, yet Worldcoin’s broader downtrend persisted. The bulls were unable to gather enough momentum to spark a significant rally, indicating that the token’s short-term price movements may not yet signal a fundamental turnaround.
Is Worldcoin Overvalued?
One critical metric investors should watch is the Network Value to Transactions (NVT) ratio, which uses token circulation to assess the token’s valuation. Currently, Worldcoin’s NVT is at a six-month high, suggesting that its market value far outweighs the value of transactions occurring on the network. In simpler terms, WLD may be overvalued relative to its current usage, a red flag for potential investors.
Network Activity Remains Sluggish
Further concerns come from a decline in network activity. Between April and July, Worldcoin’s daily active addresses showed steady engagement during the week, with declines over the weekend. However, by early August, this activity took a sharp downturn and has struggled to recover since.
Additionally, Worldcoin’s development activity—which measures the level of developer engagement with the project—also dipped during this period but has since returned to near-July highs. Still, the lack of sustained user activity raises questions about the token’s long-term viability, particularly for investors hoping for a more robust recovery.
Despite the recent uptick in price, Worldcoin’s long-term outlook remains uncertain. While accumulation signals suggest some investors are holding out for a rebound, the broader downtrend and overvaluation concerns point to a cautious approach.
Until network activity improves and the token’s valuation aligns more closely with its usage, any recovery may be short-lived. For now, Worldcoin remains a speculative bet, with long-term investors needing to keep a close eye on market trends and on-chain metrics to navigate its uncertain future.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
