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Layer 1 blockchain protocol Sui (SUI) has been making headlines recently, recording a staggering 120% increase over the past 30 days, allowing the protocol’s native SUI token to outperform the 10 largest cryptocurrencies on the market, peaking at a new Highest level ever $2.35 on October 13.
However, since this peak, the coin has declined by approximately 5%, largely due to growing concerns over allegations of insider selling among project stakeholders.
Can SUI match Solana’s success?
Market expert LightCrypto took to social media platform X (formerly Twitter) on Sunday to express doubts about the sustainability of SUI’s recent gains. In a long time mailHe pointed to SUI’s dramatic rise, which increased fivefold from its previous low of $0.5 on August 5, amid the broader market collapse that occurred that day.
While the market appears to be eager for new winners, macroeconomic conditions point to more Price gainsLightCrypto raised two important points that could undermine SUI’s upward trajectory.
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First, the expert questioned the rationale behind SUI’s current fully diluted valuation of $23 billion (FDV), especially when compared to Solana’s $73 billion valuation according to Coingecko. Data.
LightCrypto argued that it no longer makes sense to assume that SUI can replicate Solana’s success, especially given that it currently trades at only a quarter of Solana’s market capitalization.
The expert also challenged the community to articulate a compelling risk-reward scenario that justified this disparity, questioning whether SUI had demonstrated even a fraction of Solana’s potential.
A potential market correction is on the horizon
Second, LightCrypto alleged the worrying trend of Insider sellingsuggesting that insiders, including what is believed to be a large endowment fund, have dumped around $400 million worth of tokens during the recent rally.
The expert noted that this selling trend has not only occurred at higher price levels, but has also been ongoing since much lower valuations.
Ultimately, LightCrypto believes it will speed things up sales It may create an unsettling atmosphere for retail investors, who may buy tokens from those who have a better knowledge of their true value.
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The implication is stark: As these supposed insiders cash out while retail investors chase momentum, the likelihood Market correction It looms large on the horizon, which could threaten the token’s current rally.
Despite these claims, SUI, which is currently trading at $2.24, continues to see significant investor interest in the token, with Trading volume By 36% in Sunday’s session, worth approximately $1.7 billion.
Moreover, regardless of LightCrypto’s alarming findings, corrections are normal after a token reaches a new level. Record highwith the obvious example of Bitcoin (BTC), which has not been able to approach this level since it reached a new record high of $73,7000.
What is certain is that if the expert’s claims prove true, it could exacerbate a possible correction in the SUI price, as the first major support level for the bulls is the $2,046 area.
Featured image of DALL-E, chart from TradingView.com