🌎 ApeCoin Drops 20% Amid ApeChain Launch and Market Weakness

ApeCoin Token Experiences Sharp Reversal

On October 22, ApeCoin token saw a significant reversal, erasing some of the gains made over the previous five days. Associated with Yuga Labs, the creators of Bored Ape Yacht Club, ApeCoin dropped to $1.44, marking a nearly 20% decline from its highest level earlier in the week. Despite this drop, the token remains 200% above its lowest point in August.

Impact of ApeChain Launch on ApeCoin

The decline in ApeCoin’s value came just two days after Yuga Labs launched ApeChain, a highly anticipated layer 3 network on Arbitrum One. ApeChain allows developers to create applications across various industries, including gaming, decentralized finance, and non-fungible tokens (NFTs).

Moreover, ApeChain provides ApeCoin holders with the opportunity to generate returns through staking their APE tokens. This process involves delegating tokens to secure the network and earning rewards in return. A unique feature of ApeCoin is its automatic yield mode, which reinvests tokens automatically to maximize returns.

Yuga Labs aims for ApeChain to expand its ecosystem, especially as Bored Ape Yacht Club (BAYC) faces challenges. According to data, BAYC sales have significantly declined this year, with total sales reaching $7.1 million in September, down from $41 million in March. At its peak in January 2021, BAYC had sales of $346 million.

Factors Contributing to ApeCoin’s Price Drop

Two main factors contributed to the recent decline in ApeCoin’s price:

Profit-Taking by Investors: The drop occurred as investors “sold the news.” Typically, assets rise ahead of and immediately after a major event, followed by a pullback as some investors take profits.
Market Saturation: Investors are anticipating challenges for ApeChain due to the highly saturated layer 1, 2, and 3 industries.

Additionally, the broader weakness in the crypto market influenced the sell-off. Bitcoin pulled back to $67,000 after reaching $69,300 on October 21, while the total market cap of all cryptocurrencies dropped by 3% to $2.43 trillion.

Technical Analysis of ApeCoin

On Monday, the APE token rose to a high of $1.754, just below the 61.8% Fibonacci Retracement point. It formed a spinning top candlestick, characterized by a small body and long upper and lower shadows. While this pattern is often neutral, it can also signify a reversal.

ApeCoin remains above the 50-day and 200-day Exponential Moving Averages (EMAs) and the 38.2% Fibonacci Retracement point. Therefore, the token may continue falling and retest the 200-day moving average at $0.980. This view will become invalid if the token rises above this week’s high of $1.754.