Mantra (OM) has captured the attention of the cryptocurrency community with a remarkable 57.85% increase in its price over the past month. While this price surge has provided a glimmer of hope for OM holders, there’s growing concern regarding the network’s adoption. Despite the upward price momentum, the rapid decline in new address creation signals potential challenges for the future of Mantra and its token.

Network Adoption Declines Significantly

While OM’s price chart has shown impressive gains, the network’s adoption rate tells a different story. According to data from blockchain analyst Ali Martinez, the creation of new addresses on the Mantra network has drastically fallen by 99.7% over the past three months. Back in November, the number of new addresses created stood at 110,517, but that number has now dropped to a mere 252. This sharp decline in new user registrations suggests a reduction in demand and on-chain activity, which could have lasting consequences for OM’s price.

This fall in new addresses aligns with a larger trend: a significant drop in the adoption rate. Over the past week, the adoption rate dropped from 53% to just 23%. Such a dramatic decrease is concerning as it signals fewer users are engaging with the network, while some existing users are closing their accounts. When a network experiences a drop in user adoption, it often leads to a reduction in transaction volume and an overall slowdown in activity, both of which can negatively impact a cryptocurrency’s price.

Impact of Declining Adoption on OM’s Price

Although the Mantra network is facing adoption challenges, OM’s price has managed to hold steady, with the token trading at $7.53 at the time of writing. This reflects a 5.73% increase over the last 24 hours and a significant 57.85% surge in the past month. Despite this price increase, market sentiment remains largely bearish.

A closer look at the futures market reveals that many investors are expecting a price decline. According to Coinalyze, 52.66% of investors are taking short positions on OM, anticipating a price drop, while 47.3% are betting on a rise. The predominance of short positions indicates that the majority of traders expect a downward price movement, suggesting a negative outlook for OM in the short term.

In addition, more OM tokens are flowing into exchanges than out, signaling that traders may be preparing to sell. This shift in net flows, which recently turned positive at $1.02 million, indicates that investors are moving their tokens to exchanges with the intent to sell, which could add downward pressure on the price.

What’s Next for Mantra (OM)?

Although OM’s price has risen recently, the overall network fundamentals are weakening due to the decline in user adoption. For the price to maintain its upward momentum, the Mantra network must attract new users and foster more on-chain activity. If the trend of declining adoption continues, it could result in a price pullback, possibly bringing OM down to the $7.00 mark.

However, if the speculative buying momentum continues, OM could attempt to push higher, with a potential target of $8.00. But for a sustained rally, the network will need to demonstrate signs of revitalized user engagement and growing adoption.

Conclusion:

Mantra (OM) is currently at a crossroads. While the price surge is encouraging for investors, the plummeting adoption rate and declining network activity cast a shadow over its future prospects. The token’s performance will ultimately depend on whether the network can reverse its adoption decline and attract a fresh influx of users. Without this, the current price gains could quickly fade, and a retracement may be on the horizon. For now, OM holders should closely monitor adoption metrics and market sentiment to determine whether the token can maintain its bullish trajectory.