ApeCoin Staking Goes Live: Did It Pump the Price or Just On-Chain Metrics?

The crypto world is always buzzing with anticipation for new staking opportunities, and ApeCoin [APE] staking was no exception. On November 6th, the wait ended as ApeCoin staking finally launched, much to the delight of investors eager to earn rewards. The first rewards were distributed on December 12th, marking a significant milestone for the ApeCoin ecosystem. But did this much-anticipated staking launch translate into price gains for APE? Let’s dive into the details and see what happened.

ApeCoin Staking: A Quick Start and Millions Poured In

The initial response to ApeCoin staking was nothing short of enthusiastic. Within just 24 hours of the Ape Foundation’s staking platform going live, a staggering $30 million worth of APE tokens were locked into staking contracts. The official staking contract quickly accumulated around $32 million in APE within a single day. This surge wasn’t just about APE tokens; a significant number of Bored Ape Yacht Club [BAYC] and Mutant Ape [MAYC] NFTs were also staked. This highlights the strong community engagement and the desire of NFT holders within the ApeCoin ecosystem to participate in staking.

The Staking Vulnerability: A Double-Edged Sword?

While the staking launch was largely positive, a known vulnerability in the staking architecture also surfaced. Here’s how it worked:

• When users staked both a Bored Ape NFT and APE tokens together in the staking contract, a link was created between these two assets.
• This link meant that the NFT owner couldn’t sell their Bored Ape NFT without also selling the associated APE tokens.

This created an interesting situation. On one hand, it potentially discouraged the dumping of staked APE if someone wanted to sell their NFT. On the other hand, it could limit the flexibility for NFT holders who might want to sell their NFT without also parting ways with their staked APE. It remains to be seen how this vulnerability will play out in the long run and if it will be addressed in future updates.

On-Chain Metrics: Active Addresses See a Significant Jump

As predicted, the launch of ApeCoin staking did have a noticeable impact on various on-chain metrics. Data from Santiment reveals some interesting trends. One key metric that saw a significant boost was the number of active addresses.

Active Addresses Surge:

• In the week leading up to and following the staking launch, the number of active addresses on the ApeCoin network experienced a considerable climb.
• This number reached a high of 16,000 addresses, marking a new peak in recent months.

This surge in active addresses suggests increased network activity and user engagement, likely driven by the excitement surrounding staking and the opportunity to earn rewards. It indicates a growing interest and participation within the ApeCoin ecosystem.

APE Price Action: Staking Excitement vs. Market Reality

Despite the positive on-chain metrics, the impact of staking on the price of APE has been less straightforward. Let’s break down the price movements:

Initial Price Pump:

• When staking was officially announced on December 6th, the price of APE did see an initial jump of over 6%.
• This suggests that the announcement did create some positive price momentum, fueled by investor anticipation.

Price Correction and Minimal Net Movement:

• However, this initial price surge was short-lived. A clear clash between buying and selling pressure emerged in the market.
• The result was minimal net price movement. The excitement around staking seemed to be counteracted by other market forces.

72-Hour Fluctuation:

• In the 72 hours prior to the analysis, the price of APE had increased by 12.48%.
• However, this gain was subsequently erased, with the price dropping by over 7% by the time of writing.
• At the time of publication, APE was trading around $4.

In essence, while staking might have provided a temporary price boost, it wasn’t enough to trigger a sustained upward trend. The price action suggests that broader market sentiment and other factors are playing a more significant role in determining APE’s price.

MVRV Ratio: Are Investors Still in Profit?

Despite the price reduction, some investors who bought APE in the recent past were still seeing profits, according to the 30-day Market Value to Realized Value (MVRV) ratio.

MVRV Ratio Insights:

• Santiment’s data indicated that investors who acquired APE tokens in the preceding 30 days were, on average, still in profit.
• However, the data also showed that these profits were rapidly diminishing, suggesting that a potential shift towards losses was on the horizon.

The changing MVRV ratio highlights an interesting divergence between on-chain data and token value. While on-chain activity was up and some investors were still in profit, the overall token price struggled to maintain upward momentum. This could indicate a disconnect between the perceived value derived from staking and the market’s valuation of APE.

Conclusion: Staking Impact – More On-Chain Buzz Than Price Pump?

The launch of ApeCoin staking was undoubtedly a significant event for the ApeCoin community. It successfully generated significant on-chain activity, as evidenced by the surge in active addresses and the substantial amount of APE and NFTs staked. Investors showed strong initial enthusiasm and participation in the staking program.

However, the impact on the price of APE has been less pronounced. While there was an initial price pump upon the staking announcement, it was quickly neutralized by market forces. The price action suggests that staking alone may not be enough to drive sustained price appreciation in the current market environment.

Key Takeaways:

• Positive On-Chain Impact: Staking successfully boosted on-chain metrics like active addresses, indicating increased network activity and user engagement.
• Limited Price Impact: The staking launch didn’t translate into a significant and sustained price increase for APE. Broader market conditions likely played a more dominant role.
• Investor Profitability Dwindling: While some recent investors were still in profit, the MVRV ratio suggested that these profits were shrinking, indicating potential future losses if price trends continue.
• Staking Vulnerability: The NFT-token linking vulnerability introduces an interesting dynamic that could impact NFT trading and APE token flow.

For ApeCoin investors, staking provides a valuable opportunity to earn rewards and participate in the ecosystem. However, it’s crucial to understand that staking, while positive, is just one factor influencing the price of APE. Broader market trends, project developments, and overall crypto sentiment will likely continue to play a significant role in APE’s future price trajectory. Keep an eye on those on-chain metrics, but also stay informed about the wider crypto market to make informed decisions about your ApeCoin investments.