Cake is a native token of Pancake Swap decentralized exchange, which is built on the Binance BNB chain. Cake token is used for liquidity provisions, governance, and fee payment. Cake holders can stake their tokens in a liquidity pool and earn rewards. Holders can also participate in the governance of the Pancake Swap platform by voting on the proposals.
The pancake swap price is in a strong bearish momentum after breaking monthly support of the $3 level. Cake prices started to rise at the start of 2023, same as the other crypto-currency.
Price formed a high of $4.73 level, which was not justifiable, and the price started to melt, which has just stopped now. PancakeSwap prices made an upward movement of approximately 50%.
Pancake Swap drops inflation rate.
A major change in the protocol caused a significant downfall in the Price last week. Pancake Swap has passed a proposal that reduces cake’s inflation rate by around 4%. Previously the inflation rate was over 20%.
This would probably mean that the stakers of cake tokens will be able to earn considerably fewer rewards for staking, affecting Price negatively.
The proposal is beneficial for Cake token in the long run as it slows down the speed at which token emission occurs. Stakers are finding it very difficult to ignore the impact on their returns.
The main reason for this decision was due to flaws in the tokenomics of the underlying project. At the previous rate of emission, new funds were introduced very frequently for its Price to be maintained. This will safeguard the tokens’ future in the long run.
Will Cake price break support of $1.81?
Chaikin money flow score is -0.35, indicating intense weakness and high bearish pressure in the market. If the cake can break the recent, there is a higher probability that the Price might fall to the $1.50 level causing a downfall of approximately 17%.
RSI has been in an oversold zone since April 24, indicating how strong is the bearish momentum for the Price. Cake price did show signs of bullishness in the previous week but was halted by the bears.
Currently, the Price is headed towards the recent support. The Bollinger bands have opened up, indicating high volatility in the market. The cake price was residing near the lower band and did show signs of a pullback.
Conclusion:
The market structure and price action for PancakeSwap price is highly bearish. The bulls need to defend the current support and gain bullish momentum to halt this meltdown. The technical parameters show that there is a higher possibility for the continuation of bearish sentiment in the market.
The decision made by Pancake Swap will help them in the long run. The present might impact prices terribly on Price, but the future holds a growth prospect for PancakeSwap prices.
Technical levels:
Major support: $1.81
Major resistance: $1.92
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning.
Source: https://www.thecoinrepublic.com/2023/05/16/pancakeswap-price-prediction-cake-price-breaks-monthly-support/