OlympusDAO’s rise indicates this about rebase tokens and the larger market

After Bitcoin’s fall below the bull market support band, the larger market including most of the top altcoins saw a rebound from the higher price levels.

Paving the way for losses, rebase tokens saw high sell-offs with many of them trading below lower price levels and some even below their “risk-free” value. OlympusDAO (OHM), the top rebase token as per market cap was down 66.49% from its October all-time high of $1,452.

One reason behind the fall of rebase tokens over the last month could be their highly inflationary nature which creates more sell pressure for the tokens. Nonetheless, with the larger market eyeing recovery the Rebase Tokens market cap stood at $5.04 Billion, noting over 5% change over the last day.

At the same time, OHM/LUSD noted over 40% pump in price over the last four days as hope for rebase tokens, particularly OHM seemed to be rekindling. Despite the rise in price OHM’s health seemed weak at the moment amid negative social sentiment for the token. 

Weak health

OHM’s rise and fall have been rather dramatic and pretty much sum up how the larger market has been riding. The token was up 500% from August to October. Moreover, it is now back to where it started as it fell in price from October to December. Once more, Olympus has picked up but something was still off. 

Active addresses for the asset have been in a downtrend since November making lower peaks. In fact, at the time of writing, active addresses were sitting at all-time low levels last seen in early September. Network growth further presented that OHM doesn’t see any signs of ‘new blood’ inflow and the activity kept low. 

Source: Sanbase

The increased activity and strong movements around December 14 could be because of Olympus V2 migration due to which activity and participation may have picked up. So, what led to the ‘bleed out’ for the altcoin?

Tough times 

Of late there has been a lot of negative commentary about the OlympusDAO as skeptics argue that its core functionality is almost unsustainable, so much so that it could be a Ponzi scheme. It’s core functionality being, a staking scheme with an annual percentage yield (APY) of 7,000% via new OHM token mints 

Nonetheless, despite the negative commentary OHM’s price and participation rose massively during its October ATH. A return of the retail side to the token however in the near term could push OHM into a rally. At the time of writing, its 7-day MVRV saw a massive uptick as euphoria seemed to rekindle alongside price rise. 

Source: Sanbase

At the lower price level it did seem like OHM was in a good position right now in terms of risk/rewards ratio. However with the fate of rebase tokens looking foggy at the moment, amid negative crowd sentiment looming OHM’s long-term growth, was a matter of speculation.

In terms of getting on the OHM bandwagon, a recovery to the ATH levels if the token’s price picks up can give over 60% returns. With the coin’s share ratio noting -4.38, its performance compared to a ‘risk-free’ asset looked weak.