What is ApeCoin?

ApeCoin is one of the hottest cryptocurrencies and has been the talk of the town lately. If you have ever done slight research on NFTs, you will surely come across Bored Ape Yacht Club (BAYC) and ApeCoin is very much linked to these ultra-expensive NFTs.

According to Apecoin’s official website, the coin is intended for the web3 economy and will serve as a protocol layer for future initiatives. It is the governance asset within ApeCoin DAO and coin holders will be able to vote on proposals made by the community. However, it is also worth noting that owners of BAYC NFTs are entitled to a certain amount of ApeCoins for free. Is that good or bad news? Only time will tell.

Recent developments

ApeCoin has had an extraordinary rally, bagging more than 130% in gains between 19 and 28 of April. However, the tables turned rather quickly, and let us find out why.

The main driver for the significant gains was the anticipation of Otherdeed NFTs, a virtual land sale backed by BAYC creators, Yuga Labs. 

Since Dutch auction is a common minting method for NFTs, investors are buying and hoarding ApeCoins so that they could purchase as much Otherside Metaverse Virtual Land as possible during the auction. It turned out that the NFTs were sold at a flat price of 305 ApeCoin, sending ApeCoin down the drain. Adding to the disappointment is the implementation of a limit in terms of how many such NFTs can be minted per wallet in the first release.

On the flip side, ApeCoin is accepted as a means of purchase for all Yuga Labs products. Yuga Labs is huge. It is valued at a whopping $4 billion just a year after its inception. A close association with the company will add a nice little support to its bullish outlook in the long run, considering all the potential use cases of ApeCoin. Not only that, but OpenSea, one of the biggest marketplace for NFTs has also announced that ApeCoin will be accepted for purchasing some of the NFTs on the platform.

Impact

While the virtual land sold out like hotcakes, a huge amount of money (over $80 million) was lost in gas fees as the investors failed in their attempt to mint the land NFTs. 

Two parties

A. The lucky ones

Those who were lucky enough to mint the land NFT, sold it, and made a lucrative amount of profits (Easy $10k bagged.)

Figure1: One of the offers for Otherside Land NFT. Source: OpenSea

B. The not-so-lucky ones

Those who were not lucky enough wasted thousands of dollars, failed to mint the land NFT ended up dumping their ApeCoin in rage, which causes the extended sell-off in ApeCoin

What Now?

As ApeCoin (APEUSDT) just went through a huge retracement, the most pressing question then becomes: “Should I jump on the bandwagon and buy the dip?”

But before you do so, let’s do some quick analysis:

APEUSDT Daily
Source: TradingView

From a technical standpoint, ApeCoin plummeted by more than 40% in the past 3 days, with the previous swing low and 200 MA acting as immediate support. If the support holds, the price may resume its upwards trajectory. However, if prices break through the first support, we are looking at the next support level at $10.90 for a potential rebound.

The plunge may seem like a huge drop, but if we take a step back and shift our perspective, ApeCoin is actually trading at the same prices as it was a week ago. 

Source: CoinMarketCap

ApeCoin is also the metaverse coin with the highest market capitalization, followed not so closely by Decentraland in second place and The Sandbox in third. Could this be a signal that ApeCoin is still relatively overvalued?

BTCUSD Daily
Source: TradingView

We can also make a quick comparison to see how ApeCoin performed relative to Bitcoin, the leader in the Cryptocurrency market.

Even after a retracement of greater than 40%, ApeCoin still outperformed Bitcoin by a staggering amount. Since its listing back in March 18 on Coinbase, ApeCoin has risen by more than 82% at the time of writing. On the other hand, Bitcoin has lost almost 6% of its value during the same period.

Summing It Up

To conclude, ApeCoin is still the new kid on the block, and we can see its unlimited potential as the Metaverse and the cryptocurrency industry, in general, continue to evolve.

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Welf
Trader, Technical Analyst