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Is PancakeSwap Headed To $5? CAKE Jumps On Supply Reduction Plan

Last Updated December 28, 2023 2:14 PM
Nikola Lazic
Last Updated December 28, 2023 2:14 PM

Key Takeaways

  • CAKE started a larger uptrend that has more room to go.
  • Supply reduction fundamentally caused the price spike of nearly 20%.
  • Chart analysis points out more upside ahead.

The native token of PancakeSwap, a decentralized exchange (DEX), CAKE, has witnessed a significant price increase of nearly 20% today, December 28. This rise follows a proposal to reduce CAKE’s maximum token supply from 750 million to 450 million. 

With the price being in an uptrend from the December 20 low of $2, marking an overall increase of 85%, can it continue and reach $5? 

CAKE Token Supply Reduction 

The token supply reduction proposal  has been met with overwhelming approval from the PancakeSwap community, with over 90% of the voting in favor. The voting began on Thursday and is set to conclude on December 29. PancakeSwap’s development team leads this “Kitchen” initiative, consisting of the lead developers or “chefs.” They aim to clarify CAKE’s future token supply and address the significant token inflation after the DEX’s launch in 2021 to bootstrap its ecosystem.

Supply reduction
Token supply reduction proposal

The PancakeSwap team has justified the proposal by stating that after nearly three years in development, they now understand the incentives needed for growth, marking a shift from a hyperinflationary tokenomics model.

In recent months, PancakeSwap has been actively expanding, including its integration into Coinbase’s Base layer-2 network and the Ethereum layer-2 scaling network Linea, indicating a strategic multi-chain expansion approach.

CAKE Price Analysis 

The price of CAKE has been on a parabolic rise since December 20, when it made a higher low of $2. This was most likely the end of wave 4 from the five-wave impulse that started on October 19, when the price was $1 – its all-time low. 

CAKE price analysis
CAKE price analysis

This is why the rise in December is the ending wave. But, as it’s still on an upward trajectory, it still has more room to go before its completion. It’s moving toward its next significant resistance zone around $5, so we might see this interaction serve as a stopping point. 

However, it already entered the upper range from the previous structure, and it can meet resistance at any point. From its current level of just below $4, the price is 28% of the $5 zone, and as the chart doesn’t show any signs of struggle, we could primarily expect it to reach this area. 

Whether it continues rising to $5 or stops below, after the current rise ends, we expect a larger correction that brings the price back to $2 for its first bull market correction. If this plays out, the price of CAKE will establish a higher plateau, forming its first higher low, indicating a lasting and sustainable uptrend in 2024, possibly leading the price back to $20. 

Disclaimers

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

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