Why I Won’t Be Buying Apecoin Yet

After being listed across all major exchanges on its very first day, ApeCoin (APE-USD) gained an astounding 1600% within 24 hours to catapult itself to the eyes of the world. The market capitalization of the token rose from zero to $4.152 billion while its price appreciated from $1 a coin to $28 in the same time.

An image of NFTs coming out of a phone screen

Source: Alongkorn Sanguansook/Shutterstock

Basically, ApeCoin’s sensational entrance and growing reputation in the cryptocurrency space drew the eyes of every crypto investor. However, there are a few questions regarding ApeCoin tokens and how they were apportioned to its NFT community.

To begin, what is ApeCoin?

What Is ApeCoin?

ApeCoin is a token created by the popular non-fungible token (NFT) team Bored Ape Yacht Club (BAYC) to drive the growth of the Web 3.0 economy, according to the team.

“APE is a token made to support what’s next, controlled and built on by the community. It will serve as a decentralized protocol layer for community-led initiatives that drive culture forward into the metaverse,” the team declared.

It is a decentralized token, and all its decision-making or governance will be done by ApeCoin DAO members. A Decentralized Autonomous Organisation (DAO) is an organization whose rules and processes are encoded in a computer program to enforce transparency and give power to all members without a central government.

Why Is ApeCoin a Very Unique Token?

The first thing I look for in a project is the quality of the team behind it. ApeCoin has one of the most diverse and outstanding teams, and they are unlikely to launch a project without sound research and a solid plan. This is evident in the success of BAYC’s Opensea projects and the size of the community they were able to build across the world in the last two years.

This huge community was well taken care of in the new project, as several people received millions of ApeCoin tokens for holding BAYC NFTs. Meaning, the community will always stand by them.

On the ApeCoin board are the following people:

  • Alexis Ohanian – Co-founder of Reddit and a General Partner and Founder of Seven Seven Six
  • Amy Wu – Head of Ventures and Gaming at cryptocurrency exchange FTX
  • Maaria Bajwa – Principal at venture capital firm Sound Ventures
  • Yat Siu – Co-founder and chairman of blockchain gaming company Animoca Brands
  • Dean Steinbeck – President and general counsel at blockchain company Horizen Labs

Utility

Another thing I look for in a project is utility. Does ApeCoin has sound use case?

Presently, it appears it is a token for the NFT community. However, given the rate at which the community is growing and the fact that it is the first token to be created for the culture, it could have significant use cases down the line. This is because even within the cryptocurrency space the concept of web 3.0 and NFT is very new, and it is a niche BAYC has proven to be successful at.

ApeCoin Community

The size of a token community usually dictates its hype and subsequently, demand for the token. In this case, ApeCoin has one of the biggest communities in the cryptocurrency space. This, I predict, will translate to more awareness that will eventually spur demand for the ApeCoin token.

Another good thing about ApeCoin and its team is the fact that it was listed on most exchanges on the very first day it was launched. This will ensure accessibility across the world. ApeCoin is the first token to have this much access since its launch.

Here’s Why ApeCoin Is Not a Buy Yet

Despite all the uniqueness of ApeCoin, its allocation structure could make it a dump on newbie investors who bought above $10 a coin. ApeCoin’s total supply is capped at 1 billion but 15%, or 150 million tokens, were given to BAYC and MAYC’s NFT holders. These are largely retail investors and I think they will be looking to cash out as soon as they can do so at a reasonable rate.

This will consistently increase available supply and drag on price, as it is presently playing out. The price has currently fallen to about $10 a coin, that is a 64% decline from its record high. This will continue until most of them, as can be seen on Etherscan, dispose of their holdings. About 48 of them have 5 million tokens and many others have near that amount, holding more tokens than 90% of the exchanges that listed ApeCoin.

Therefore, if you are not in yet I will suggest you remain on the sideline and continue to monitor price action until it calls the bottom, I will think below $6 a coin will be a reasonable buy point, but I won’t be getting in until the month of April.

ApeCoin is a long-time buy because of all the aforementioned factors. Still, it would be better to get in at an appropriate price, so it would be easy to jump off if its outlook changes.

On the date of publication, Samed Olukoya did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Samed Olukoya is a financial markets analyst with over two decades of experience. He founded Investors King and has worked with top business platforms across the world.


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