Injective Protocol (INJ) hit $6.23 on April 11, extending its 2023 growth rate to 400%. With near-euphoric social sentiment and a large number of holders approaching breakeven points, is INJ due for a price correction?

Injective is an EVM-compatible layer 1 blockchain network built on the Cosmos ecosystem. INJ's recent price surge is partly related to its acquisition of new network participants. Since the beginning of the year, the network has attracted several new projects that leverage its decentralized bridges, oracles, and composable smart contract layer to build DeFi applications.

However, on-chain data shows how growth in social volume and historical market value to realized value (MVRV) patterns could soon trigger an INJ price correction.

An upcoming Injective Protocol (INJ) sell-off?

INJ has continued its strong performance into 2023, reaching another new year-to-date high of $6.30 on April 11. However, market capitalization vs. realized value data compiled by Santiment suggests that INJ could be experiencing a price correction. MVRV identifies potential buy/sell areas by comparing the average price at which asset holders acquired an asset to its current market value.

The chart below shows that MVRV could soon reach a critical sell zone. Currently, most INJ holders who bought in the past 30 days are sitting on profits of around 34%. Historical data from MVRV shows that holders could take profits around the 42% area. This means that INJ could see a pullback once prices approach the $6.9 area.

MVRV data provides insights into market sentiment swings to identify potential buying and selling opportunities. With an important sell zone approaching, Injective holders may soon begin to turn pessimistic.

Likewise, INJ’s surging social volume is another key indicator validating the bearish premise. Injective has attracted considerable media attention with its stellar 2023 performance and multiple airdrops from its native DeFi projects.

According to the Santiment chart below, total mentions of the INJ project on the crypto social media platform have surged by more than 1,000% over the past month.

Between March 11th and April 11th, Injective Protocol social volume increased from 18 to 208, while setting multiple local highs in the first week of April.

Historically, sudden spikes in social volume have often been followed by periods of INJ price correction. If this trend reappears, Injective Protocol holders could see a drop in price in the coming weeks.

INJ Price Prediction: $5.42 Retest Incoming

According to IntoTheBlock, price distribution data for coins held in INJ wallet addresses shows that a cluster of holders over 100 million may soon break even.

Typically, when the market value of an asset rises to a breakeven price for a significant number of holders, they may be more inclined to sell and take their profits. This selling pressure can create resistance and inadvertently push prices down.

Once INJ price slightly exceeds the $6.58 floor, investors controlling the 2,460 breakeven addresses holding 104 million tokens could begin selling. However, the 1,300 addresses that purchased INJ at the $5.42 average price could provide supportive buying pressure to prevent losses.

Nonetheless, if INJ manages to break above the $6.58 resistance, the bulls may continue to rally. However, it will face an uphill battle with the 104 million INJ that could be released to the market when the 2,460 addresses break even.

A breakout above this area could see the Injective protocol native coin reach 2-year highs above $9.40.