Crypto markets have entered a period of volatility, and few tokens have been impacted more than PancakeSwap (CAKE). Over the past few days, the token has declined significantly and is approaching a key point that could make or break its performance.
On Tuesday, April 1, PancakeSwap was trading at $1.95, having declined 24.98% over the past seven days. The latest decline reversed its gains from earlier this month when the exchange briefly flipped Uniswap in trading volume.
Currently, PancakeSwap, the largest DEX on the BNB chain, is facing new competition impacting its volumes and revenues. Just a few days ago, Pump.fun’s PumpSwap has overtaken PancakeSwap in trading volume. While PancakeSwap later reclaimed second place behind Uniswap, weekly volumes have been down 40.96% to $9.386 billion.
This challenge from a Solana-based competitor is hurting CAKE token’s fundamentals, which rely on exchange revenues. Notably, PumpSwap uses some of its revenues to burn CAKE tokens, reducing the supply. When volumes slide, exchange revenue falls, and CAKE becomes more inflationary.
At the same time, technicals are not great for the CAKE coin, as it is forming a bearish pattern that has traders concerned.
PancakeSwap (CAKE) Price Prediction
Earlier this month, the PancakeSwap coin failed to break through the descending trendline formed at December highs. This line forms a wedge formation from the February lows, which could soon make the difference between a breakout or capitulation.
Notably, the token is trading very close to the $1.90 support level. A fall below this level would break the pattern and likely signal capitulation, bringing it down to the $1.4 zone. However, if Cake breaks the $2.8 resistance, it could signal a bullish reversal.
For this reason, the short-term outlook is bearish, with a potential dip to the $1.9 or $1.8 zone. The CAKE token will bounce back if the support holds, probably around the $2.4 level. Lower highs suggest that the long-term outlook is also bearish unless bulls manage to reverse the trend and push it above the $2.8-$3 resistance.
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