Frax Finance faces intense selling pressure as whales offload

• FXS whales influenced the market as the hype observed last week cooled down.
• Frax Finance’s TVL and developer activity maintained a positive outcome despite the recent slowdown.

Frax Finance [FXS] is starting to experience the return of sell pressure after previously going through a bullish phase. Could this be a temporary short-term profit-taking event, or is there more to the story?

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On-chain data revealed that some FXS whales were contributing to sell pressure at press time. A number of addresses holding a large amount of the Frax Finance tokens recently registered outflows totaling 1.42 million FXS tokens valued at over $8 million.

These outflows were observed towards the end of September. Moreover, most outflows went to one address, which was likely an exchange address.

Beware of $FXS selling pressure from whales!

0xd53E sold 219,674 $FXS for 773 $ETH ($1.29M) yesterday and currently has 1.03M $FXS($5.95M) left.

0x6C7d withdrew 1.42M $FXS ($8.18M) yesterday.

0xd53E and 0x6C7d appear to be the same whale, both receiving $FXS from 0x8E45. pic.twitter.com/WlyLiKbVQq

— Lookonchain (@lookonchain) September 30, 2023

The sell pressure from the whales triggered a bearish pivot for FXS, which was previously on a bullish trend. The token exchanged hands at $5.61 after a 7.6% dip from its weekly high on 27 September.

The real question now is whether the whale outflows are a sign of short-term profit-taking, or could it be an indicator that they’ve become disenfranchised with Frax Finance.

Source: TradingView

There is a significant chance that the sell pressure from whales is mostly just short-term profit-taking. This is because the subsequent downside appears to have faded after the RSI reached its mid-range.

The recent retracement may also be an indicator that the hype around the recent rally is coming to an end.

Assessing Frax Finance’s on-chain data

The market previously reacted positively to news that U.S. treasury bills would be integrated into the Frax V3 system. This announcement still underscores Frax’s potential long-term growth prospects.

As for its on-chain data, there was a significant spike in social dominance in the last 24 hours, likely due to the market’s reaction to whale sell pressure.

Source: Santiment

In addition, daily active addresses achieved a 4-week peak on 28 September and has since slowed down. This suggested that retail demand has slowed down considerably, and this may have paved the way for sell pressure.

Meanwhile, FXS concluded September with a spike in the age consumed metric, indicating that a large number of tokens were recently moved.

How much are 1,10,100 FXS tokens worth today?

Additionally, Token Terminal revealed some interesting findings regarding Frax Finance. Fees on the protocol are down by 30.23% in the last 30 days, while daily active users dipped by 10.6% during the same period. Staked assets (annualized) dipped by 5.24.

On the other hand, the Total Value Locked gained by 5.17% to $444 million. There was also a significant growth in developer activity, as the number of core developers grew by 12.5% in the last 30 days.