Mantra's Price Surge Defies Waning Network Adoption

Mantra [OM] has seen a significant spike in its price over the past month, with a 57.85% increase. However, this growth has not been accompanied by a corresponding increase in network adoption. In fact, the new address creation rate has dropped by 99.7% over the past three months, indicating a decline in interest and demand for the network.

According to Ali Martinez, Mantra's network has contracted significantly, with new address creation falling from 110,517 in November to just 252. This decline in new address creation suggests that fewer new users are joining the network, which can lead to a shrinking user base and lower demand for transactions. The adoption rate has also dropped from 53% to 23% over the past week, further confirming the waning interest in the network.

The negative Price DAA divergence over the past three weeks also indicates a fall in network activity. Historically, a lack of users has preceded a price decline for native tokens, as it reflects market bearishness. In this case, the lack of demand is slowly affecting OM's price movement.

Despite the decline in adoption, OM's price has held strong. At the time of writing, the altcoin was trading at $7.53, marking a 5.73% hike over the last 24 hours. This bullish outlook has extended itself on the monthly charts by 57.85%. However, the overall market sentiments remain bearish, with most investors taking short positions. According to Coinalyze, the Futures market has 52.66% of investors going short while 47.3% are longs.

The bearish sentiment is further confirmed by the market seeing more exchange inflows than outflows, and OM's netflows turning positive. If this turns into selling, it could put pressure on OM's price. To sustain its recent gains, the network needs new addresses and more active users. If the adoption rate continues to decline, speculative demand could drive the price down, and a retrace could see OM drop to $7.0. However, if the speculative uptrend can hold for the short term, the altcoin will attempt $8.