Retail Traders Should Exercise Caution After Mantra Reaches All-Time High: Here’s Why

Mantra (OM) has posted impressive gains over the past week, hitting a new all-time high while the broader cryptocurrency market saw some declines.

The native token of the Mantra layer-1 blockchain surged by 137% in the past seven days and gained 43% in the last 24 hours alone. On Sunday, OM reached an all-time high (ATH) of $3.42, and is currently trading around $3.34. With a market cap of $2.85 billion, it has secured the 38th spot among the leading cryptocurrencies.

A major catalyst for Mantra's recent surge was its partnership with Google Cloud, announced in late October. Additionally, an influx of whale activity on November 14 contributed to the bullish sentiment surrounding the token.

However, despite these gains, there are some on-chain signals suggesting that a correction could be on the horizon.

Whale Profit-Taking and Slowing Accumulation

After Mantra’s rally to a new ATH, whale activity appears to have cooled off. Data from IntoTheBlock shows that the large holder net inflow dropped from 2.96 million OM on November 14 to 1.8 million OM on Saturday, as the price surpassed the $2.50 mark. This slowdown in whale accumulation suggests that the strong buying pressure from larger investors may be tapering off.

Additionally, the number of OM daily active addresses in profit surged from just 27 on November 13 to 297 unique wallets as of yesterday. This increase in profit-taking behavior is concerning, especially when you consider that 94% of Mantra's circulating supply is held by whales. This could set the stage for a potential selloff if these large holders decide to take profits.

Short-Term Traders Could Trigger a Pullback

Further data reveals that over 24% of Mantra's addresses have held the token for less than a month, and 43% have held it for less than a year. This indicates that a significant portion of the supply is in the hands of relatively new holders, with a large group of them likely to take profits if prices start to dip.

With retail traders holding just 6% of the total supply, there is a risk that many of these short-term investors may begin cashing out, especially if the price begins to show signs of a reversal.

Conclusion

While Mantra's recent rally is impressive, the combination of slowing whale accumulation, increasing profit-taking, and the high percentage of short-term holders creates a precarious situation. Retail traders should be cautious and monitor on-chain metrics closely, as profit-taking could trigger a pullback or consolidation before another potential rally.