ApeCoin token saw a significant downturn on Oct. 22, undoing some of the gains accrued over the last five days.
ApeCoin (APE), linked to Yuga Labs, the team behind Bored Ape Yacht Club, fell to $1.44, marking a nearly 20% decrease from its peak this week. Nevertheless, it remains 200% higher than its lowest point in August.
This decline came two days after Yuga Labs introduced ApeChain, its highly anticipated layer 3 network built on Arbitrum One. ApeChain facilitates developers in creating applications across various sectors, including gaming, decentralized finance, and non-fungible tokens.
Moreover, ApeChain allows ApeCoin holders to earn returns by staking their APE tokens, a method where users lend their tokens to ensure the network’s security and receive rewards in exchange.
One of ApeCoin’s standout features is its automatic yield mode, which enables tokens to be reinvested automatically, optimizing returns.
Yuga Labs is optimistic that ApeChain will aid in expanding its ecosystem during a period when Bored Ape Yacht Club is facing difficulties.
According to data from CryptoSlam, BAYC sales have significantly declined this year, with total sales plummeting to $7.1 million in September from $41 million in March. At its height in January 2021, BAYC witnessed sales of $346 million.
The drop in ApeCoin’s price can be linked to two primary reasons. Firstly, the decrease occurred as investors proceeded to “sell the news.” Traditionally, assets experience a rise prior to and immediately following a major event, followed by a decline as some investors decide to take profits.
Secondly, APE’s price fell as investors foresee additional hurdles for ApeChain, given the overly crowded layer 1, 2, and 3 sectors.
Additionally, the sell-off was influenced by a broader downturn in the crypto market. Bitcoin (BTC) retreated to $67,000 after hitting $69,300 on Oct. 21, while the overall market capitalization of cryptocurrencies fell by 3% to $2.43 trillion.
ApeCoin price formed a spinning top
On Monday, the APE token reached a high of $1.754, just short of the 61.8% Fibonacci Retracement level. It then created a spinning top candlestick, marked by a small body and extended upper and lower shadows. While this pattern is often neutral, it may also signify a reversal.
ApeCoin remains above both the 50-day and 200-day Exponential Moving Averages and the 38.2% Fibonacci Retracement point. Hence, the token could continue to decline and test the 200-day moving average at $0.980. This perspective will be negated if the token surpasses this week’s high of $1.754.
