The price of (SUI) has experienced a sharp decline after its market debut across leading cryptocurrency exchanges. On May 5, the SUI price was $1.26 per token, a drop of nearly 70% from its all-time high of approximately $4 on Binance two days prior. Interestingly, the token’s market top on other exchanges like Kraken was $1.60 or lower, suggesting it was in “price discovery” mode following its launch.
Despite this plunge, SUI has managed to maintain its overall market gains, rising a staggering 1,200% since its market debut. This initial uptrend has been mostly driven by traders who perceive Sui, a new layer-one blockchain project, as potentially more scalable than its rivals. Its original contributor, Mysten Labs, claims that Sui will become the first internet-scale programmable blockchain platform by processing 300,000 transactions per second, a stark contrast to Solana (SOL), which handles up to 10,000 transactions per second.
Venture capitalists, including a16z and FTX Ventures, invested $336 million in the Sui project through two investment rounds in 2021 and 2022. Mysten Labs stated this gave investors access to their firm’s equities, rather than SUI tokens. However, the project’s token economics revealed that 14% of its 10 billion SUI supply has been allocated to investors, with Mysten Labs having not yet disclosed when these tokens would be distributed or any associated vesting schedule.
As for FTX Ventures, a subsidiary of the now-defunct FTX crypto exchange, Mysten Labs repurchased the stakes held by the company in April 2023 and took back the rights to buy SUI tokens previously held by FTX for around $96 million.
Although traders and analysts show their conviction in Sui’s goals of becoming an attractive blockchain alternative, concerns exist surrounding SUI’s supply schedule. Notably, the Sui Foundation plans to increase the SUI supply by approximately 15% by the end of 2023. According to analyst Dmitriy Lavrov, this could prompt traders to hold off entering the market until further price declines occur.
From a short-term technical perspective, the SUI price is currently facing selloff pressure near $1.31. A pullback scenario could see the token dip to $1.26 as a short-term downside target. If the oversupply scenario persists, the price could decrease to $1.21 on May 5 or over the weekend, a further 7% decline from current levels.
On the flip side, analyst Ameba predicts that SUI could rise towards $1.50 in May after decisively closing above its descending trendline resistance. Fellow trader Crypto Mikey projects a similar uptrend for the Sui price. As always, investors and traders should conduct their own research and exercise caution with every investment and trading decision, as risks are inherent in the market.
Source: Cointelegraph
