ApeCoin price plunges 26% ahead of its grand launch

If there is one altcoin project talked about the most in recent months, it must be ApeCoin. Apecoin(APE), the Ethereum-based token from the Bored Ape Yacht Club ecosystem, has officially become the most valuable metaverse token with a market cap of over $6.6 billion USD at the time of writing. In only 1.5 month after BAYC creators Yuga Labs announced the creation of the coins, it has surpassed currencies of more established projects such as Decentraland`s MANA, The Sandbox`s SAND, and Axie Infinity`s AXS. The recent price jump can be mainly attributed to the excitement around the launch announcement for “Otherside”, BAYC`s metaverse project. Otherside has auctioned land exclusively through ApeCoin via Dutch auction, with a land supply totaling 100.000 NFTs. The recent push now has ApeCoin ranked at number 23 for cryptocurrencies as a whole.

Since its announcement the price has appreciated over 160% and has printed a new alltime high of $27,8. Yet only a few days away from its launch price has plunged by 26% liquidating $36 million worth of assets in its process. Is it just the hype or is there more to it then meets the eye. Let us take a look at some of the technical factors and see if we can find a few answers here.

If we look at the image above, then if one has the right tools and technical knowledge in its possession, then it is indeed very possible to find a technical reason for its price increase in the last two weeks. After its initial rise on the 20th of April, we can see a retracement in price after which a stage of consolidation took place. Price made a new high around the 24th of April and saw a small and narrow retracement later on in the day, after which a new aggressive move started that eventually led to new alltime highs. If one studies the chart closely then it can be observed that the correction can be classed as an extremely bullish one. One that finds its technical roots in Elliott Wave theory. A so called “bullish” consolidation is part of a subcategory of corrections, which in Elliott Wave theory is known as a running flat. If such a correction is identified, one can then use Fibonacci tools to anticipate accurate targets as to where price might find its resistance point. As we can see in its image below we have just fell 30 cents below the 1.618 fibonacci extension level.

If we also take the volume distribution into account, then we can clearly see that as price was searching for a place of liquidity, its distribution became more lean as price accelerated upwards. As we can see below in figure 3 as price approached its technical fibonacci level, the volume was not up to par in order to gather enough strength to actually hit the level. As the keen eyed and knowledgeable traders noticed this, a sequence of profit taking ensued, which began a sequence of events. As taking profits translate into selling pressure, the traders who entered at the top set the stage for a further drop down, as over leveraged traders get liquidated in the process, amplifying the drop to the downside. This eventually resulted in a drop of 26%, where the knowledgeable traders were able to take profits on time, and the traders that simply followed the hype ended up with a bad straw.

The bottom line I wish to make with this article. If you have found yourself caught in this kind of situation, the lesson that can be learnt is that before “Aping” into a project you think is going up massively in the future you might be right. But this does not mean it will go up in a straight line. Therefore, always do your research, and get the education you need to succeed before attempting to meddle with the markets, especially projects that have yet to prove themselves.

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