Layer 1 blockchain protocol Sui (SUI) has made headlines just lately, recording a formidable 120% improve over the previous 30 days, permitting the protocol’s native token SUI to outperform the highest 10 largest cryptocurrencies in the marketplace, culminating in a brand new all-time excessive of $2.35 on October 13.
Nevertheless, since this peak, the token has retreated by almost 5%, largely on account of rising considerations over allegations of insider promoting among the many challenge’s stakeholders.
Can SUI Match Solana’s Success?
Market professional LightCrypto took to social media platform X (previously Twitter) on Sunday to specific his skepticism concerning the sustainability of SUI’s current good points. In a prolonged put up, he famous SUI’s substantial rise, which has quintupled from its earlier lows of $0.5 on August 5, amid the broader market crash that occurred that day.
Whereas the market seems to be keen for brand new winners, with macroeconomic situations pointing to additional value good points, LightCrypto raised two crucial factors that would undermine SUI’s upward trajectory.
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Firstly, the professional questioned the rationale behind SUI’s present $23 billion absolutely diluted valuation (FDV), notably when in comparison with Solana’s $73 billion in accordance with Coingecko knowledge.
LightCrypto argued that it not is sensible to imagine SUI can replicate Solana’s success, particularly on condition that it presently trades at only a quarter of Solana’s market valuation.
The professional additional challenged the group to articulate a compelling risk-reward situation that justifies such a disparity, asking whether or not SUI has demonstrated even a fraction of Solana’s potential.
Potential Market Correction Looms
Secondly, LightCrypto alleged the worrying development of insider promoting, indicating that insiders, together with what’s believed to be a big endowment fund, have dumped round $400 million in tokens in the course of the current rally.
The professional famous that this promoting development has not solely occurred at increased value ranges, however has additionally been ongoing since a lot decrease valuations.
Finally, LightCrypto believes that the acceleration of those gross sales might create a disconcerting environment for retail buyers, who could also be shopping for tokens from these finest knowledgeable about their true worth.
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The implication is stark: as these supposed insiders money out whereas retail buyers chase momentum, the potential for a market correction looms giant, doubtlessly threatening the token’s present rally.
Regardless of these allegations, SUI, presently buying and selling at $2.24, continues to see vital investor curiosity within the token, with buying and selling quantity up 36% in Sunday’s session, valued at roughly $1.7 billion.
Moreover, no matter LightCrypto’s troubling findings, corrections are regular after a token hits a brand new document excessive, with the clear instance of Bitcoin (BTC), which has been unable to come back near that stage since hitting a brand new document excessive of $73,7000.
What is definite is that if the professional’s claims show to be true, it might additional exacerbate a possible correction within the SUI value, with the primary main assist stage for bulls being the $2.046 space.
Featured picture from DALL-E, chart from TradingView.com