As you can observe over the last few days the native token of the PancakeSwap project, CAKE, is gaining a lot in value. What is the reason for this? Will there be a very strong correction after the increases? Let me share my observations with you.
For the past few weeks, I have been getting on Twitter more and more and watching the biggest DeFi portals on Binance Smart Chain and beyond. A few days ago there was a migration to new and better liquidity pools marked V2. Now everything has been transferred correctly and users can enjoy better pool improvements and higher returns through this initial period. CAKE has once again set a price record and at the time of writing is over $34. This represents a weekly increase of 48%. This is a very big deal. What could this be due to?
PancakeSwap, in addition to offering cryptocurrency exchanges, also offers the opportunity to earn through commissions and through Stake. That is, liquidity pools and Syrup Pool. This is in my opinion the main growth factor. The ever-increasing profits for users, especially the wealthiest ones, makes them interested in the market and therefore choose the most popular services, which means the most secure at the moment. This creates demand. When demand exceeds supply, the price rises because the interest is high, so lower offers are immediately bought out. The same situation occurred when CAKE cost $10 and rose to over $18 at the beginning of April.
This is how the biggest players realise their profits. Not only did they invest in CAKE when it cost several times less, but the interest rate and the constantly rising price allow them to earn "several times", using this simplified analogy.
I believe that a correction will take place. The same happened with the price in February and early April. It remains to realise profits if we want to make money, or to continue investing if we expect long-term income.
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Crypto exchanges
Social networks
PeakD
Publish0x
Odysee (formally LBRY)
