SafeMoon V2’s [SFM] gloomy outlook darkens, will there be a turnaround?

• Investors’ sentiment for SafeMoon V2 continued to stay negative.
• Most of the technical indicators were bearish on SFM with no sign of recovery.

There is an old saying which goes, “whatever goes up must come down”. And this dictum is perhaps the most accurate depiction of the journey traced by SafeMoon V2 [SFM] over the last two years or so.

How many are 1,10,100 SFMs worth today

The decentralized finance (DeFi) token, which showed immense promise at the peak of 2021 bull run, has been going downhill in price and valuation with no end in sight for its woes.

The V2 upgrade pushed the coin to its zenith in January 2022. However, since then, SFM has shed a whopping 89.79% of its value until press time, data from CoinMarketCap revealed.

Even the bullish cycle of 2023, which reinvigorated the broader crypto market, failed to infuse much life into the asset. On a year-to-date (YTD) basis, SFM was down more than 27%.

Source: CoinMarketCap

Nothing ‘Safe’ about this journey

SFM, which was launched as a BEP20 token on the BNB Chain, was one of the many crypto assets that managed to rake in the moolah during the 2021 market frenzy. It saw soaring valuation and high demand from retail investors.

Furthermore, the SafeMoon team adopted a unique tokenomics model wherein, a 10% tax was imposed on each and every sale of SFM tokens. This strategy discouraged investors from selling as they were at a loss as soon as they invested, thus encouraging long-term holding. The proceeds from the tax were then distributed among SFM holders.

However, because of the mechanism, the community criticized the project as a Ponzi scheme. This was because it pays early adopters while needing an increasing amount of funding to continue rewarding those who join later.

Additionally, it was one of the first instances of the project coming on the radar of crypto watchers. The project tried to address this concern by reducing the rate to 2% for transactions and wallet-to-wallet transfers in its second iteration, V2. But this was not the end of SafeMoon’s problems.

Investors lodge lawsuits

SafeMoon has been at the receiving end of numerous lawsuits, accusing the executives, several celebrities who endorsed the coin, of manipulating investors to hold their tokens.

A large part of the social hype around SafeMoon was driven by celebrity endorsements from musicians Lil’ Yachty and Nick Carter, and YouTuber Logan Paul. These celebrities were later sued by many SafeMoon investors as part of a class-action lawsuit, for being involved in a pump and dump scheme by promoting the SFM token with misleading information.

In a different lawsuit, SafeMoon was charged for selling tokens without identifying them as securities as required by the U.S. Securities and Exchange Commission (SEC).

In April 2022, popular Youtuber Stephen “Coffeezilla” Findeisen released a video, accusing the top management, including CEO John Karony, of indulging in possible fraudulent activities. While this was not proven in the courts of law, it did a fair degree of damage.

The latest predicament of SafeMoon was an exploit. A hacker used a bug in the smart contracts to deplete the liquidity pool. The attack cost Safemoon roughly $9 million worth of SFM tokens.

Interestingly, the hacker agreed to return 80% of the total amount, as per a 19 April update provided by SafeMoon.

Gloomy outlook

Faced by challenges from multiple fronts, SafeMoon’s future prospects looked dicey. Ambitious plans of launching a cryptocurrency exchange and its own blockchain were pushed back indefinitely.

While the project tried to instill a sense of optimism among its supporters by providing updates about its blockchain development, the absence of timelines summed up the development activity on the network.

Even the official Twitter handle of SafeMoon was dull and provided sporadic updates. This led to a drastic fall in SFM’s social mentions. The metric only showed an uptick when the news of the exploit was revealed.

Investors’ sentiment continued to trend in negative territory. Without any significant network development or real-world use case to put future bets on, users basically shied away from putting their money into a troubled asset.

Source: Santiment

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No sign of recovery

At the time of writing, SFM exchanged hands at $0.0001556, down by 4.18% in the 24-hour period. The Relative Strength Index (RSI) was in the oversold territory, suggesting overtly bearish sentiment for the coin.

The On Balance Volume (OBV) has been in a free fall since mid-April, as capital continued to move out. The Moving Average Convergence Divergence (MACD) moved below the signal line in the negative territory. This added evidence to the rising sell pressure narrative.

Source: Trading View SFM/USDT