DEGEN has experienced notable price fluctuations since its debut on Coinbase, leading to a surge in buying interest and a remarkable 127% increase shortly after being listed.
However, the initial excitement seems to have subsided, with DEGEN currently trading at $0.007389, reflecting a 7% decrease in the past 24 hours.
This decrease raises questions about whether the initial hype has waned or if there is potential for a comeback.
DEGEN Cryptocurrency Faces Market Correction
DEGEN, a meme-based token on Coinbase’s L2 network Base, experienced a surge in both price and trading volume following its inclusion in the exchange’s listing roadmap.
The token saw a 127% jump from $0.004 to $0.009, with trading volume spiking from $8.5 million to $89 million.
However, this price rally was short-lived, resulting in many investors holding DEGEN at a loss. Currently, approximately 23,000 addresses collectively hold around $3.7 billion worth of DEGEN with unrealized losses, while fueled by FOMO in hopes of a price reversal.
Should bulls fail to uphold the $0.007 support level, around $2 billion worth of DEGEN could be susceptible to liquidation, as investors may rush to break even against their acquisition price of $0.006.
Typically, meme-based tokens like DEGEN increase on-chain activity, benefiting Coinbase through transaction fees.
In essence, as users engage in DEGEN trading, the transactional volume generates revenue for Coinbase, making the incorporation of such tokens strategically advantageous for the platform.
Despite the initial surge, bulls were unable to turn the $0.009 resistance level into support amid the prevailing market volatility.
If successful in doing so, surpassing the $0.009 mark could potentially propel DEGEN back to levels not witnessed since mid-June.
Can history repeat itself this time around?
Exploring Potential Scenarios
Interestingly, for meme tokens like DEGEN, maintaining community interest often relies on regular developmental updates that give investors something to look forward to.
For DEGEN, a considerable surge in development coincided with a price spike, reaching a high of $0.03 in April, while trading volume peaked at $130 million.
This marked the last significant activity before a substantial decline over subsequent months, until the recent listing reignited lost enthusiasm.
In addition to development progress, monitoring significant holders – particularly whales, who account for 63% of the major holder group – remains crucial, as they possess 28.08 billion DEGEN tokens.
Intriguingly, the listing did not deter large holders from taking action; throughout September, they deposited millions of DEGEN into exchanges to prevent a price reversal.
Nevertheless, on the day of the listing alone, they withdrew a significant 388 million tokens.
However, their backing turned out to be short-lived, as they subsequently sold 15 million tokens on exchanges, triggering a substantial price decline.
If this trend continues, a retreat from the current $0.007 support level could lead to substantial liquidations, putting $2 billion worth of DEGEN at risk.
Hence, transitioning control from large holders to long-term investors is imperative. Otherwise, centralized dominance could impede DEGEN’s potential for a bullish upturn, irrespective of listings or development initiatives.