PancakeSwap (CAKE) Surges After Reaching Major Trading Milestone

Key Takeaways

• CAKE price has increased by 10% in the last 24 hours as PancakeSwap’s volume breaks $1 trillion.
• The MVRV ratio shows that the cryptocurrency remains undervalued despite the upswing.
• CAKE appears to have broken out of a bullish pennant, indicating that the rally may extend.

Over the last 30 days, PancakeSwap (CAKE) has held its ground as one of the best-performing cryptocurrencies out of the top 100. Within that period, CAKE’s price has increased by 17% and is showing signs that it could hit $3.

With the broader market condition relatively unstable recently, market participants may be concerned about whether the rally can continue.

In this analysis, CCN reveals why CAKE’s recent uptick could just be the beginning of a larger rally. This is contrary to the speculation that it could face challenges in attracting further gains.

CAKE Rises Following Protocol’s Landmark Trading Volume

At the time of writing, CAKE trades at $2.78, up 10% in the last 24 hours. As one of the month’s top gainers, CCN found out that the token reached the feat after PancakeSwap’s trading volume reached the $1 trillion milestone.

According to DeFiLlama, the protocol’s trading volume surged by 42% in the past week. The analytics platform also showed that it surpassed the combined volume of Uniswap and Raydium in the last 24 hours.

Following this milestone, some traders might speculate that the CAKE’s price is nearing a local top.

Token Undervalued, Support Strong

However, the Market Value to Realized Value (MVRV) ratio suggests otherwise. This metric helps determine whether a cryptocurrency is undervalued or overvalued relative to its fair value.

A rising MVRV signals high unrealized profits, often prompting holders to sell. On the other hand, a declining MVRV ratio indicates falling gains, which typically reduces selling pressure as holders opt to hold their positions.

According to Santiment, the altcoin’s 30-day MVRV ratio sits at -45.66%, indicating that the CAKE is undervalued.

An in-depth analysis of CAKE’s on-chain data reveals strong support between $2.55 and $2.80, according to the In/Out of Money Around Price (IOMAP) metric.

The IOMAP data reveals that unrealized profits in the previously mentioned price range exceed those in the $2.84–$3.26 region. This indicates that the potential sell pressure at this level might not be able to suppress CAKE’s price.

CAKE Price Hints at $4 Run

On the 4-hour timeframe, CAKE’s price has broken out of a bullish pennant.  The bullish pennant indicates the continuation of a strong upward move after a brief consolidation phase.

A further evaluation of the same chart indicates that the Money Flow Index (MFI) has climbed to the positive region. This MFI reading indicates rising buying pressure around cryptocurrency.

If this trend continues, CAKE’s price could rise to $3.41. If demand for the cryptocurrency increases further, it could reach the $4 mark.

However, if the buying pressure fades, this might not be the case. In that scenario, the cryptocurrency’s value might drop to $2, positioned at the 0.618 Fibonacci level.