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Layer 1 blockchain protocol Sui (SUI) has made headlines not too long ago, recording a formidable 120% improve over the previous 30 days, permitting the protocol’s native token SUI to outperform the highest 10 largest cryptocurrencies in the marketplace, culminating in a brand new all-time excessive of $2.35 on October 13.
Nevertheless, since this peak, the token has retreated by almost 5%, largely attributable to rising considerations over allegations of insider promoting among the many undertaking’s stakeholders.
Can SUI Match Solana’s Success?
Market professional LightCrypto took to social media platform X (previously Twitter) on Sunday to specific his skepticism concerning the sustainability of SUI’s current positive factors. In a prolonged publish, he famous SUI’s substantial rise, which has quintupled from its earlier lows of $0.5 on August 5, amid the broader market crash that occurred that day.
Whereas the market seems to be keen for brand spanking new winners, with macroeconomic circumstances pointing to additional worth positive factors, LightCrypto raised two important factors that might undermine SUI’s upward trajectory.
Associated Studying
Firstly, the professional questioned the rationale behind SUI’s present $23 billion totally diluted valuation (FDV), notably when in comparison with Solana’s $73 billion in response to Coingecko information.
LightCrypto argued that it now not is sensible to imagine SUI can replicate Solana’s success, particularly provided that it at the moment trades at only a quarter of Solana’s market valuation.
The professional additional challenged the group to articulate a compelling risk-reward situation that justifies such a disparity, asking whether or not SUI has demonstrated even a fraction of Solana’s potential.
Potential Market Correction Looms
Secondly, LightCrypto alleged the worrying pattern of insider promoting, indicating that insiders, together with what’s believed to be a big endowment fund, have dumped round $400 million in tokens through the current rally.
The professional famous that this promoting pattern has not solely occurred at larger worth ranges, however has additionally been ongoing since a lot decrease valuations.
In the end, LightCrypto believes that the acceleration of those gross sales could create a disconcerting ambiance for retail buyers, who could also be shopping for tokens from these finest knowledgeable about their true worth.
Associated Studying
The implication is stark: as these supposed insiders money out whereas retail buyers chase momentum, the potential for a market correction looms giant, probably threatening the token’s present rally.
Regardless of these allegations, SUI, at the moment buying and selling at $2.24, continues to see vital investor curiosity within the token, with buying and selling quantity up 36% in Sunday’s session, valued at roughly $1.7 billion.
Moreover, no matter LightCrypto’s troubling findings, corrections are regular after a token hits a brand new document excessive, with the clear instance of Bitcoin (BTC), which has been unable to return near that stage since hitting a brand new document excessive of $73,7000.
What is for certain is that if the professional’s claims show to be true, it might additional exacerbate a possible correction within the SUI worth, with the primary main assist stage for bulls being the $2.046 space.
Featured picture from DALL-E, chart from TradingView.com
