Frax Finance (FXS), a cryptocurrency that recently enjoyed a bullish streak, is now grappling with renewed sell pressure.
The big question on everyone’s mind is whether this is a brief episode of profit-taking or if there’s more to this story.
Recent on-chain data has revealed that certain FXS whales are contributing to the selling pressure. Multiple addresses holding substantial amounts of Frax Finance tokens have seen outflows totaling 1.42 million FXS tokens, valued at over $8 million.
These outflows occurred towards the end of September, with a significant portion of the tokens flowing into a single address, likely belonging to an exchange.
The selling activity by these whales has prompted a shift in sentiment for FXS, which had been on a bullish trajectory. After a 7.6% drop from its weekly high on September 27th, the token now trades at $5.61.
The key question now is whether these whale outflows represent short-term profit-taking or indicate a loss of interest in Frax Finance.
It’s quite plausible that the selling pressure from whales is primarily a case of short-term profit-taking. This interpretation gains support as the subsequent downward movement seems to have tapered off, especially considering that the RSI (Relative Strength Index) has returned to mid-range levels.
The recent pullback could also signify that the initial excitement surrounding the recent rally is subsiding.
It’s essential to remember that the market had responded positively to the news of U.S. treasury bills being integrated into the Frax V3 system. This announcement underscores the long-term growth potential of Frax.