Why ApeCoin’s fortunes could soon change
- APE has the potential to reverse its losses if history repeats itself.
- If buying pressure increases, the number of holders in loss may reduce.
For a while, ApeCoin [APE] holders have had to contend with a significant decrease in token value. This decrease ensured that APE’s 365-day performance exhibited an 80% plunge.
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However, the holders of the token may heave a sigh of relief and change the direction of the large negative returns soon, Santiment disclosed.
An opportunity for APES
Using the Market Value to Realized Value (MVRV) metric, the on-chain analytic platform noted that APE has left the danger zone and jumped into the opportunity area.
? #Crypto markets remain notably #underbought on the monthly timeframe. Assets like $GALA, $APE, $MAGIC, and $SRM are notables with particularly large negative trader returns, which should inevitably correct. Make a copy of our model and plug in your API! https://t.co/dZaBEvxpfQ pic.twitter.com/yczYyrGL4w
— Santiment (@santimentfeed) September 26, 2023
By comparing the market value and realized value of an asset, the MVRV can be used to get a sense of a cryptocurrency’s fair value. Hence, the conclusion by Santiment. To assess what the chances of an uptick are, the price-DAA divergence comes into play.
For the uninitiated, the price-DAA divergence is a short form of the price action relationship with the Daily Active Addresses. As a measure of the overall network activity, the DAA is an extremely important indicator to determine a cryptocurrency’s valuation.
At the time of writing, the metric had risen to 57.31%. While there is no theory to suggest an optimal prediction, the current position indicates an entry point. This was because the DAA exhibited signs of an increase while the price decreased.
In a case when the DAA trends downwards, and the price goes in the upward direction, then it could have been a sell signal. But do traders share the same sentiment? Well, ApeCoin’s funding rate may have an answer to this.
Bullish traders want to stop the losses
According to Coinglass, ApeCoin’s eight-hour funding rate was 0.0073%. Funding rates are payments made between long and short-positioned traders. A negative funding rate suggests that traders are bearish on a cryptocurrency. In this instance, shorts pay longs a funding fee.
However, APE’s funding rate being positive means that traders are bullish on the price action. This could remain the same as long as shorts get their funding fee from longs.
Read ApeCoin’s [APE] Price Prediction 2023-2024
In the interim, ApeCoin holders in profit were 705,000 as shown by the daily on-chain transaction volume in profit. On the other hand, the on-chain volume in loss was far ahead at 1.59 million.
Should APE succumb to the demands of traders and historical data, then the number of holders in loss would reduce. However, APE would need an increase in buying pressure to neutralize its underbought status for the price to increase.