The native token of Tron, TRX, has shown significant upward momentum in 2024, resulting in substantial gains. However, a recent analysis suggests that a notable correction might be on the horizon.
An analysis by CryptoQuant has highlighted the likelihood of a bearish trend for TRX holders based on the cryptocurrency’s 180-day Sharpe ratio, which has a track record of accurately identifying market tops.
According to CryptoQuant, the Sharpe ratio has recently entered a high-risk zone, indicating potential downside risk for prices beyond the current levels, despite the possibility of further price appreciation in the short term.
TRX has been on a steady uptrend, recording a 120% increase year-to-date and hitting a new all-time high of $0.224 on November 23. Although some selling pressure has emerged since then, TRX was trading at $0.20 at the time of writing.
With TRX retracing about 10% from its recent peak, there are indications of selling pressure, although not necessarily a significant sell-off taking place.
Evaluating Selling Pressure on TRX
On-chain data suggests a decline in activity from large holders and institutions. For instance, inflows from large holders peaked at 2.13 billion TRX on November 16, while outflows slightly exceeded inflows at 2.16 billion TRX on the same day.
As of November 27, large holder inflows had decreased to 205.77 million TRX, with outflows similarly dropping to 159.87 million TRX, indicating a net increase in demand from whales.
However, the overall trend showcases diminishing interest from whales and institutional players, reflected in the ongoing TRX outflows since mid-November.
Although there were $5.27 million in positive flows recorded on Wednesday for TRX, the derivatives market displayed a peak open interest of $160.25 million on November 24, significantly lower than previous highs witnessed in August.
The weak open interest this month underscores subdued demand for TRX derivatives, especially compared to the fervor seen during previous bull cycles.
Despite the potential short-term selling pressure indicated by low open interest and reduced whale activity, TRX has largely experienced limited selling pressure, potentially setting the stage for further upside in the near future. This trend could persist, fueling additional gains in the upcoming months.