Two main reasons why the current decline of ONDO is only temporary.

The blockchain platform Ondo Finance, which focuses on institutional-grade financial services, is also facing pressure after the overall market downturn in the past day.

Its native token, Ondo Finance [ONDO], has dropped by 10% in the past 24 hours.

Despite the price correction, investor activity and capital inflows continue to support the market. ONDO's market capitalization currently stands at $1.27 billion, while the number of holders has climbed to a record high of 174,360.

Why ONDO Is Declining

The recent decline appears to be mainly caused by a sharp outflow of liquidity from the derivatives market.

Withdrawals in the past 24 hours have reduced the circulating balance to about $110 million. The total outflow reached approximately $11 million, with nearly $1 million attributed to liquidations.

A sharp price drop accompanied by a surge in trading volume usually indicates strong selling momentum. According to CoinGlass data, ONDO's trading volume increased by 46%, reaching $204 million.

This shows that investors remain highly active, even though current market sentiment reflects short-term bearish pressure.

On-Chain Liquidity Continues to Grow

On-chain capital inflows continue to strengthen. Notably, as of December 15, Ondo Finance's total value locked (TVL) has soared to a record high of $1.926 billion.

An increase in TVL typically signals renewed inflows from long-term investors. This trend suggests that despite recent price weakness, participants are continuing to increase their capital allocation to the protocol.

In short, investors are depositing ONDO to earn yields through liquidity pools while preparing for potential price appreciation in the future. This strategy allows them to benefit from both yield and price gains.

According to DeFiLlama, the protocol generated $2.24 million in fees in December alone.

Rising fees typically reflect increased platform usage, indicating growing demand for ONDO and intensifying potential buying pressure.

If on-chain activity continues to grow at this pace, ONDO could benefit significantly from the current market conditions and potentially support a price rebound.

Binance Investors Step In

Binance traders have also shown renewed interest, which suggests a possible price recovery.

CoinGlass data shows a significant increase in capital inflows on the Binance platform, and the rise in ONDO derivatives trading volume confirms this.

Net trading volume has turned bullish, with Binance accounting for the second-highest share of ONDO derivatives open interest at $22.23 million, indicating improving market sentiment.

The broader derivatives market is also showing a bullish trend, with the funding rate rising to 0.0044%. This indicates increased demand for long positions and continued capital inflows.

If this trend continues, the outlook for ONDO's rebound remains tilted to the upside.

Final Thoughts

• Off-chain data shows that ONDO has recorded a significant liquidity outflow of $11 million from the derivatives market.
• However, on-chain data shows that liquidity inflows are continuously increasing, with TVL reaching a record high of $1.926 billion.