STRK Price Unaffected By $5 Million Starknet Grant Program – History Shows No Links Between Announcements and Price Movement
Can the STRK Price Begin an Upward Movement? | Credit: Veronica Cestari
Key Takeaways
- The Starknet foundation announced a new grant amounting to $5 million on May 7.
- Previous such grants from the BNB Chain and Avalanche did not result in a price increase for their native tokens.
- Can STRK buck the trend and begin an upward trend, or will it continue its ongoing downward movement instead?
The STRK price has fallen since its launch date on February 20, when it reached an all-time high of $3.66. The decrease followed a descending resistance trend line, resulting in a 65% decline.
After bouncing on April 30, STRK made an unsuccessful breakout attempt. With this in mind, can STRK finally break out from this trend line and begin its recovery, or is more downside likely before an eventual reversal?
What is Starknet’s $5 Million Grant Program?
On May 7, the Starknet foundation announced a new grant with $5 million for projects building on the network. The program has already completed a pilot project that awarded $500,000 to 20 teams.
The program will likely split the total grant value between as many as 200 teams, ensuring that no single team receives more than $25,000. It is designed to assist teams from various backgrounds that are seeking to build on Starknet, rather than being intended for a specific industry vertical. The program will announce the results after three months.
There have been two fund announcements since the start of April. The BNB chain announced its memecoin innovation program with a prize pool of $1 million on April 3, while Avalanche did the same in March. Their native token prices did not move the week of the announcement.
So, previous history suggests there is no correlation to the announcement of a fund and the price of the native token. This has been the case with STRK so far, which has fallen by 10%.
Nevertheless, encouraging builders on Starknet could be a shrewd idea because of the minuscule Total Value Locked (TVL) in it compared to other Ethereum Layer-2 scaling solutions.
Starknet has $253 million in TVL, compared to $2.98 billion for Arbitrum, $989 million for Polygon and $913 million for Optimism. Since both Starknet and Polygon use Zk-rollups as opposed to optimistic ones for Arbitrum and Optimism, they can be considered direct competitors.
Finally, more than half of Starknet’s TVL is from Nostra , a multipurpose application used for lending, liquid staking and swapping. The Ekubo decentralized exchange and zkLend lending protocol take the 2nd and 3rd spots, respectively.
STRK Falls Under Descending Resistance Trend Line
The STRK price has fallen under a descending resistance trend line for the past 55 days. More specifically, the trend line was created on March 13, 22 days after STRK’s launch. It has caused numerous rejections so far (red icons), the most recent on May 6.
Between April 13 and 30, STRK created a triple bottom, considered a bullish pattern. While the pattern led to an upward movement, it failed to cause a breakout from the resistance trend line.
Additionally, the RSI and MACD give mixed readings. While both generated bullish divergences (green lines) before the increase, their trend lines have now broken, a sign of a bearish trend.
STRK Price Prediction: Breakout or Rejection?
The most likely wave count suggests there is another downward movement left until the correction is complete. According to the count, STRK is in the fifth and final wave of a downward movement (white). In this count, the rejection from the trend line marked the top of wave four.
If the count is accurate, STRK will break down from the $1.15 horizontal support area and decrease to $0.93, a drop of 26% from the current price. The 1.61 external Fibonacci retracement creates this target.
Despite this bearish STRK price prediction, breaking out from the descending resistance trend line and the top of wave four as a result will mean the correction is over. Then, the STRK price can increase by 35% to the closest resistance at $1.70, created by the 0.382 Fibonacci retracement resistance level.
One More Low Before the Bottom
To conclude, the STRK price trend is likely still bearish despite the announcement of a grant program. This follows previous examples set by BNB Chain and Arbitrum. The wave count suggests another low is probable before the trend reverses. A breakout from the resistance trend line will mean the correction is over.
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