ApeCoin (APE) saw a massive 118% surge in its price after the launch of ApeChain, a new Layer-3 blockchain developed on Arbitrum Orbit. In just the first three hours of its debut, ApeChain recorded an impressive $5 million in trading volume, signaling a huge influx of interest from crypto enthusiasts. ApeCoin’s total on-chain volume also skyrocketed by nearly 3000%, bringing it close to the $1 billion mark.

What’s Driving ApeCoin’s Growth?

Several key features of ApeChain have played a significant role in its rapid growth. The introduction of Automatic Yield Mode, which allows ApeCoin holders to earn passive rewards without the need for active staking, has been a major draw for users. This simplified approach to earning returns saw ApeChain’s user base swell from just 83 to over 3,000 shortly after its launch.

In addition, the new cross-network bridge on ApeChain has enhanced the utility of ApeCoin. The bridge allows seamless transfers of APE, Wrapped Ethereum (WETH), USD Coin (USDC), Tether (USDT), and Dai (DAI) across multiple networks, including Ethereum and Arbitrum. This has positioned ApeCoin as a versatile asset within the Yuga Labs ecosystem, known for its Bored Ape Yacht Club NFT collection.

APE Now a Key Gas Token on ApeChain

As the native gas token for ApeChain, APE is used for several purposes, including transaction fees, voting in the ApeCoin DAO, and payments within Yuga Labs’ products. A recent update also introduced the LayerZero Omnichain Fungible Token (OFT) standard, further expanding ApeCoin’s functionality.

After breaking through a downward trendline that had been holding back its price since June, ApeCoin’s price currently stands at $1.55, up from $1.21 the previous day. Analysts believe that if the current momentum continues, APE could hold above the $1.47 mark and potentially approach $2.

However, there are warning signs on the horizon. Despite the impressive rally, technical indicators such as the Relative Strength Index (RSI) and Stochastic RSI suggest that ApeCoin is currently overbought. This means the token could be facing a correction soon, especially as long-term holders may begin selling off their positions.

Looming Liquidation Could Impact Price Movements

Another potential challenge for ApeCoin comes from looming liquidations. According to data from CoinGlass, the key liquidation level for ApeCoin is at $1.0178. If prices continue to rise, nearly $2.59 million in short positions could be liquidated. While this could drive short-term buying pressure as traders close their positions, analysts warn that this surge won’t last. Once traders sell their positions to profit from the price increase, selling pressure could bring prices back down.

ApeCoin’s recent surge has certainly caught the attention of investors, but the road ahead may not be smooth. While the launch of ApeChain has opened up new opportunities for the token, the overbought signals and potential liquidations suggest that a correction could be on the horizon. Investors should stay cautious as the market navigates these volatile conditions.