This article was originally published at: https://peresdaily.com/analysis-apecoins-lackluster-performance-due-to-oversized-staking-rewards-and-upcoming-token-unlocks/
ApeCoin (APE), a cryptocurrency associated with the ApeCoin ecosystem, has faced underwhelming performance compared to other metaverse-based tokens such as Decentraland and The Sandbox. While APE gained 61%, SAND and The Sandbox respectively saw gains of 90% and 150%. The subdued gains in APE can be attributed to its hefty staking rewards, which are likely creating some selling pressure.
Traders are taking advantage of the oversized APE staking rewards, with the APE staking pool yielding 90% annual returns in the first two months. However, these traders are primarily interested in capturing risk-free gains instead of accumulating the token. This could make them a potential source of constant selling pressure, and the token has been heavily shorted in the futures market, particularly since the launch of the staking mechanism.
An upcoming unlock of around 9% of APE’s circulating supply in March, along with not-so-impressive fundamentals, will add further headwinds for the token. The gains in APE will depend on the success of the blockchain gaming projects in the ApeCoin ecosystem and new partnerships between Yuga Labs and big brands.
The ApeCoin ecosystem is the most valued metaverse project, not only in total market capitalization but also in the total value of its virtual world. APE will be the primary currency of the Otherside metaverse, which has 100,000 virtual land plots that have a floor value of 1.6 ETH. In comparison, The Sandbox has 113,400 land plots with a floor price of 0.98 ETH.
Yuga Labs plays a big role in the adoption of ApeCoinDAO, although it is registered as an independent entity. Recently, the firm launched an endless runner game, Dookey Dash, for the holders of Bored Ape Yacht Club (BAYC) NFTs and related collections. However, while efforts like Dookey Dash are promising, it failed to generate considerable demand for the token.
Besides the staking reward, the vesting schedule of APE adds additional dilution risk from unlocks of tokens allocated toward the team and investors. On March 15, another 25 million tokens will be unlocked for launch contributors, and 8 million tokens allocated to Yuga Labs and the BAYC founders will also be unlocked. In 2023, the circulating supply of APE will nearly double, which could induce volatility in the token’s price.
The crucial support and resistance levels for APE/USD lie around $3.29 and $7.69, respectively. If either sellers or buyers can overcome these levels, it could amplify a move in the direction of the breakout. Still, given the selling pressure staking rewards and upcoming token unlocks, with a lack of real yield or usage of APE, the path of least resistance looks to the downside.
Sources:
This article was originally published at: https://peresdaily.com/analysis-apecoins-lackluster-performance-due-to-oversized-staking-rewards-and-upcoming-token-unlocks/
