SafeMoon collapses after the creator arrest, what's next for SFM?
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Key Takeaways
SFM fell by 70% in the last 24 hours.
RSI signals oversold conditions.
Wave analysis points out the potential end of the decline.
The DeFi cryptocurrency SafeMoon faces intensified scrutiny as the SEC files charges against key executives, including founder Kyle Nagy, CEO John Karony, and CTO Thomas Smith. The SEC alleges their involvement in a deceptive operation, misleading investors through the unregistered sale of SafeMoon tokens.
Despite promises of a secure investment, the SafeMoon team is accused of significantly devaluing the token and diverting over $200 million for personal gain. The SEC’s investigation uncovered CEO Karony’s wash trading to falsely create market demand and a 50% token value drop in April 2021 due to revelations of an insecurely locked liquidity pool.
This led to the arrests of Karony and Smith, who face charges related to the misuse of investor funds for extravagant personal expenses, including high-end real estate and a custom Porsche 911 purchased with $860,000 worth of Binance Coin (BNB).
Following these allegations, SafeMoon’s valuation plummeted by 70% to a new low of $0.0000650. This development raises questions about whether it mirrors the Terra Luna saga.
SFM Price Analysis
The price of SFM has fallen by 70% yesterday, coming from a high of $0.00020 to today’s low of $0.000065. This is its lowest point since the market release, led by a continuous decline from its all-time high of $0.0024 on January 18, 2022.
RSI at its low
This significant decline pushed the RSI back into oversold territory, currently standing at 24%. It broke below the descending support level, but a potential rebound might result in a wick formation on the daily chart. Such a wick could suggest that the price has reached a bottom, or at least a local low, with a possible recovery on the horizon.
When examining the 15-minute chart and analyzing the wave structure of this collapse, there are compelling indications that it may have concluded.
Chart shows that the decline may have ended
We’ve observed a five-wave decrease, with the final wave either already completed or very close to it. Nevertheless, the absence of any bullish price movement currently leaves room for the possibility of further price decline. However, given the extent of the drop and the price entering the oversold zone, the likelihood of a rebound appears to be on the horizon.
The End of SFM?
The unfolding SafeMoon controversy draws parallels with the notorious Terra Luna collapse, leading to uncertainties surrounding SafeMoon’s future in the cryptocurrency market. In the aftermath of Terra Luna‘s downfall, the original blockchain underwent a fork and rebranding, resulting in Terra Classic. This new token witnessed a brief 952% price surge over 83 days, only to experience a subsequent 90% decline, returning to pre-surge levels where it has remained for 76 days.
SafeMoon’s trajectory seems poised for a similar course. While a short-lived price recovery driven by speculative trading is possible, resembling a pump-and-dump pattern, the long-term outlook appears bleak.
The fraud charges against SafeMoon’s founders have severely damaged the project’s credibility, creating skepticism about the potential for sustained price recovery. Without strong fundamentals to support its value, it is unlikely that SafeMoon has established a solid foundation or is on the verge of a new bullish trend.
Disclaimer
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.
Nikola Lazic is a cryptocurrency analyst and investor working in the industry since 2017. He holds a bachelor's degree in Sociology, which enables him to better understand the psychology behind the crowd´s positioning. Consequently his preferred analytical tool is Elliott Wave Theory in combination with price action analysis.
Combining his experience in trading and investing with knowledge in content writing he strives to bring the most accurate and actionable information.
