ApeCoin token experienced a sharp reversal on Oct. 22, erasing some of the gains made in the previous five days.
ApeCoin (APE), associated with Yuga Labs, the creators of Bored Ape Yacht Club, retreated to $1.44, down by nearly 20% from its highest level this week. Despite this drop, it remains 200% above its lowest point in August.
The crash occurred two days after Yuga Labs launched ApeChain, its much-anticipated layer 3 network on Arbitrum One. ApeChain allows developers to build applications in industries such as gaming, decentralized finance, and non-fungible tokens.
Additionally, ApeChain enables ApeCoin holders to generate returns by staking their APE tokens, a process where users delegate their tokens to secure the network and earn rewards in return.
ApeCoin’s unique feature is its automatic yield mode, allowing tokens to reinvest automatically, maximizing returns.
Yuga Labs hopes that ApeChain will help expand its ecosystem at a time when Bored Ape Yacht Club is struggling.
Data from CryptoSlam shows that BAYC sales have dropped significantly 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.
ApeCoin’s price drop can be attributed to two main factors. First, the decline 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.
Second, APE’s price dropped as investors anticipate more challenges for ApeChain, given the highly saturated layer 1, 2, and 3 industries.
Additionally, the sell-off was impacted by broader weakness in the crypto market. Bitcoin (BTC) pulled back to $67,000 after reaching $69,300 on Oct. 21, while the total market cap of all cryptocurrencies dropped by 3% to $2.43 trillion.
ApeCoin price formed a spinning top
APE token rose to a high of $1.754 on Monday, a few points below the 61.8% Fibonacci Retracement point. It then formed a spinning top candlestick, which is characterized by a small body and long upper and lower shadows. While this is often a neutral pattern, it can also be a reversal sign.
ApeCoin remains above the 50-day and 200-day Exponential Moving Averages 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.
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