As ApeCoin creates a reversal pattern, inflationary concerns are on investors’ minds. ApeCoin’s price run, which began in mid-March, seems to be over, as the token’s value has dropped by 70 percent in the last 2 weeks, and it might fall even more this month. A high wedge, a technical trend formed when the market integrates upward within a threshold characterized by two overlapping rising trendlines, lies at the heart of this negative forecast.
In an ideal world, increasing wedges would break into a negative breakout, verified by a substantial decline underneath the downward trendline, typically taking the market as low as the highest wedge’s altitude.
Since 18th March, APE has been drawing a reasonably similar trend, as depicted in the chart. The currency recently fell below the lower threshold of its rising wedge, pushing it closer to the setup’s notional price target of $9, which is nearly 30 percent below the price on 1st April.
Nevertheless, an apparent disparity between price increases and declining volumes over the last 2 weeks showed a diminishing positive turn, increasing the likelihood of a dip towards the wedge goal, as described above.
Inflationary Dangers
A negative setup emerges as markets start hunting for signals concerning APE’s relevance in the metaverse and NFT sectors. To summarize, Yuga Labs, the company behind the well-known BAYC NFT collection, issued 1B ApeCoin as the governing coin of their novel DAO. Then they distributed 10K APE to every BAYC NFT owner, accounting for 15 percent of the entire supply.
However, APE was listed on several top cryptocurrency exchanges, like Binance and FTX, that very day, allowing Bored Ape Yacht Club owners with quick access to their APE incentives. On 17th March, APE surged from roughly $1 to about $41 but has subsequently had a significant pullback.
Josh Ver said that APE’s market cap — which is still over 1.2K percent above its Binance launch price — is the consequence of the buzz, enthusiasm, and euphoria surrounding Yuga Labs’ achievement as a “blue-chip” firm.
Yuga Labs is an economically successful business; in 2021, they brought more than $127M in income, noting that if APE hodlers get a portion of these revenues, then APE will have enormous fundamental worth.
However, Ben Lillyexpressed reservations about ApeCoin’s inflationary strategy, which he believes can depress the coin’s value in the future. Since Yuga Labs, the 4 Bored Ape Yacht Club creators, and their assigned coins are unlocked, 9.4M APE would join the market monthly for the next year.
It suggests that around $132M in monthly demand, or $4.4M daily, will be required to absorb new supply. Lilly continued, with these supply unlocking and significant inflation during the first year, the market is left with the following question: If DAO, Yuga Labs, and BAYC can’t produce demands, how can venture capital companies and other players? Is such a thing even feasible?
Safeguard ApeCoin’s Worth
However, like Ver, Lilly believes that Yuga Labs’ valuation will safeguard ApeCoin from rising threats, stating that the $4B firms will be able to procure superior resources, technology, and artists, resulting in higher prospective asset prices in the future if employed carefully.
For example, Yuga Labs has published a teaser trailer for its planned metaverse “Otherside,” which will allow the Non-Fungible Token world’s most famous collections, like CryptoPunks, to interact with Bored Ape Yacht Club.
Similarly, it wouldn’t amaze me if an approachable Non-Fungible Token appeared on the market for usage in the Otherside Non-Fungible TokenNFT metaverse. Lilly noted, suggesting that it might encourage more people to enter the digital space, increasing ApeCoin’s market position.