February 9, 2025
Meme Coin

Here’s why ApeCoin has suffered a harsh reversal

ApeCoin experienced a sharp reversal on October 22, wiping out some of the gains it had made over the previous five days.

ApeCoin, associated with Yuga Labs, the creators of Bored Ape Yacht Club (BAYC), dropped to $1.44, a nearly 20% decline from its weekly high. However, it still remains 200% above its August low.

This decline came just two days after Yuga Labs launched ApeChain, a much-anticipated layer 3 network on Arbitrum One. ApeChain allows developers to create applications in areas such as gaming, decentralized finance (DeFi), and non-fungible tokens (NFTs). It also offers ApeCoin holders the opportunity to stake their APE tokens, securing the network and earning rewards through a process called staking. A unique feature of ApeCoin’s staking model is its automatic yield mode, which reinvests rewards to maximize returns.

Yuga Labs is betting on ApeChain to expand its ecosystem at a time when Bored Ape Yacht Club is facing challenges. According to CryptoSlam, BAYC sales have dropped significantly this year, with September sales totaling $7.1 million, down from $41 million in March. At its peak in January 2021, BAYC had recorded sales of $346 million.

The recent decline in ApeCoin’s price is primarily due to two factors. First, the token saw a typical “sell the news” reaction, where assets rise in anticipation of a major event and then pull back as investors take profits. Second, investors are cautious about the challenges ApeChain might face in a crowded landscape of layer 1, 2, and 3 networks.

The broader weakness in the cryptocurrency market also contributed to the sell-off. Bitcoin, which reached $69,300 on October 21, pulled back to $67,000, while the total crypto market cap declined by 3% to $2.43 trillion.

On a technical level, ApeCoin hit a high of $1.754 on Monday, just below the 61.8% Fibonacci retracement point, and formed a spinning top candlestick, a pattern that can signal a potential reversal. Despite the pullback, ApeCoin remains above its 50-day and 200-day exponential moving averages (EMAs) and the 38.2% Fibonacci retracement point. The token may continue to fall and retest the 200-day EMA at $0.980, though this bearish outlook could change if ApeCoin rises above this week’s high of $1.754.