ApeCoin to rally fizzle out before staking goes live?

ApeCoin to rally fizzle out before staking goes live?
Image Credit: BAYC

Lucknow(CoinChapter): ApeCoin’s price soared last week following a risk-on broader market and positive sentiment owing to the launch of staking capabilities. However, the token’s price might face some resistance to move higher this week amid weakening fundamentals.

APE/USD Daily Price Chart
Apecoin(APE/USD) Daily Price Chart, Source: TradingView

Since November 25, APE has risen by as much as 41%, notching a near 1-month high at $4.48. The recent spree of gains has made APE one of the best-performing crypto’s since the FTX debacle.

Although a recovering Bitcoin has helped underprop crypto prices, APE’s success has primarily revolved around the official launch of staking capabilities.

Back in November, blockchain developers Horizen Labs said that it’s working on a staking system for ApeCoin holders. It announced that apestake.io would launch on December 5 while reward accrual will begin on December 12.

ape staking technical series
Source: https://twitter.com/HorizenLabs/status/1595575458891907074

In crypto, staking allows holders to lock their tokens in a smart contract and earn passive income. Over the years, staking has become a popular means of investment for those looking at stable long-term returns compared to extreme price changes in the crypto market.

As per Horizen Labs, there are four different staking pools that will allow participants to get returns on their staked assets. Each pool contains a different limit on the permissible maximum stake.

APE fundamentals point to inorganic growth

APE Large Holders NetFlow
APE Large Holders NetFlow, Source: IntoTheBlock

Leading up to its staking launch, large holders (those with more than 1% of its circulating supply) began to add more APE tokens to their portfolio. This was evident by a spike in large holders NetFlow between November 25-30, which rose to its highest level this year.

However, a subsequent drop in this ratio indicated that large holders had since cashed out their gains. This coincided with a minor drop in price as well.

APE Daily Active Addresses
APE Daily Active Addresses, Source: IntoTheBlock

Elsewhere, the number of daily active addresses dipped to 1.41K from 1.7K in the past week. The decline showed that fewer users were actively transferring tokens on the blockchain, indicating a reduction in demand.

Technical Analysis

APE/USD Daily Price Chart
APE/USD Daily Price Chart, Source: TradingView

From a technical perspective, there were signs that APE’s rally could be nearing its end. The daily RSI closed in on a stiff resistance at 60. The last four times APE’s daily RSI has touched this level, a price decline has followed.

Furthermore, the daily 50 Simple Moving Average looked to deny a breakout, suggesting that bearishness had increased over the past few days.

If a downward move follows, APE would be at the risk of a 24-35% drawdown to $3-$2.6, a region where bulls have known to lend assistance to ailing prices.

On the flip side, should Bitcoin trend upwards, APE’s rally could extend on the charts. The best-case scenario would be an 33% surge to its daily 200 Simple Moving Average.

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