Are NFT Market Leader ApeCoin is Staking Rewards Sustainable?

Are NFT Market Leader ApeCoin is Staking Rewards Sustainable?

Last month, the performance of ApeCoin was inferior to other metaverse-based tokens such as Decentraland and The Sandbox. APE grew by 61% compared with a remarkable rise of 90%, and 150% noted for SAND and MANA, respectively. This moderate growth could be attributed to the generous staking rewards given to APE holders that have increased selling pressure.

APE’s March unlock of around 9% of its circulating supply, and less-than-optimal fundamentals will bring on more struggle for the token. Whether or not APE manages to thrive will be contingent upon the success of the ApeCoin ecosystem’s blockchain game projects and Yuga Labs’ new partnerships with major companies.

ApeCoin Manages to Attract Many Users with Staking Rewards

In December, the ApeCoin DAO launched its APE Staking Engine, which yielded a tremendous 90% per annum in just two months. Holders of BAYC NFTs and related collections were entitled to even higher returns, with yields soaring up to 171% annually, creating significant buying demand for the token. Unfortunately, these traders are more interested in risk-free profits on APE than holding it long-term – thus becoming an ongoing source of selling pressure.

The token was particularly popular in futures markets, especially when the staking mechanism was released. Since December of last year, APE/USD perpetual contracts have been trading at a negative funding rate.

Are NFT Market Leader ApeCoin is Staking Rewards Sustainable?

APE Is Projected to Experience a Sharp Decline in Token Value in 2023

On March 15th, a whopping 25 million tokens will be unlocked for contributors, with an additional 8 million allotted to Yuga Labs and BAYC founders. Unlocks like these can potentially increase asset value dilution; after this unlock, ApeCoin’s circulating supply consists of nearly 9% of newly released tokens! To offset any risk posed by unlocks such as these, token holders are rewarded through staking rewards.

In 2023, the circulating supply of ApeCoin is projected to nearly double, likely leading to a volatile market and price fluctuations. Supply dilution caused by token unlocks results in heightened selling pressure typically; however, traders often recognize this opportunity and buy into a rising market before liquidity dries up from short sellers. The most significant support and resistance levels for APE/USD have been identified at $3.29 and $7.69, respectively – if either buyers or sellers can break above these thresholds, it could amplify their move in that direction significantly!

Although the staking rewards and upcoming token unlocks present a market for ApeCoin, its absence of yield or use cases implies that it is too susceptible to bearish sentiment.

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