KAVA, the native token associated with the Kava platform, has had a stormy week in regards to price swings. The token, which started the week trading around $1.03, rose to $1.23 on May 23, spurred by positive news in its ecosystem.
However, the bullish momentum was short-lived, as the coin recently experienced a significant price correction. However, at the time of writing, KAVA is up 10% and is one of the biggest gainers in the cryptocurrency market over the period.
What’s behind Kava’s recent rise?
However, it is important to analyze the factors behind this rise to assess its sustainability. Cryptocurrencies are notorious for their price volatility, and sudden reversals are common. In the case of KAVA, the token saw a rapid decline after an initial rally, which raised concerns about the solidity of the bullish move.
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This pattern is often seen when a rapid rally lacks strong underlying support, resulting in a correction as the market adjusts itself. In connection with recent developments, the South Korean Digital Asset Exchange Association (DAXA) has reportedly removed investment warnings on KAVA and WAVES, the latter being another digital asset associated with the Waves platform.
The warnings were issued due to concerns about stablecoins associated with these assets, which were found to be “not usually pegged to one dollar.” However, after a comprehensive review, DAXA determined that the risks associated with KAVA and WAVES had been resolved, allowing South Korean exchanges to resume deposit services for these tokens. This news likely contributed to the positive sentiment surrounding KAVA and may have played a role in the recent price hike.
In addition, the launch of the Kava 13 mainnet and the introduction of GameFi (Game Finance) and Non-Fungible Tokens (NFTs) into the Kava ecosystem contributed to the positive momentum for the KAVA token. These developments have attracted the attention and interest of users, investors, and traders, which could lead to an increase in the price of the token.
What’s next for KAVA?
The price hike witnessed by KAVA stands out as an anomaly in the broader context of the cryptocurrency market. Given the general outlook, these gains may not be sustainable, and a subsequent correction could erase the entire bullish move.
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If the current levels near $1.20 fail to provide enough support, KAVA/USD could drop towards the support at $1.10 or below.
However, on the other hand, if there is a general uptick in market sentiment or if there is new positive news specific to the KAVA, this is likely to lead to renewed buying interest and push the price towards a retest of the recent highs. At press time, KAVA is selling at $1,134 per token with a slight increase of 0.9% over the 24-hour period.
Featured image from Kava.io, charts from tradingview.com