PancakeSwap’s CAKE gearing up to hit new highs?

The crypto market has been waking up, and even though we don’t see really significant gains yet, some participants are showing quite positive behavior. Such is the case of CAKE, PancakeSwap’s governance token, and which we will be talking about today.

At the time of this writing, CAKE is trading at $ 17.55, accumulating a gain of 5.31% in the last 24 hours. Thanks to a capitalization of $ 2.6 billion, it ranks 45th in the market, but it promises to continue climbing as we will see below.

PancakeSwap leads in the DEX space

Although it is currently not ranked 1st, at some point it did, thanks to an exponential growth in the volume of trade on its decentralized exchange.

Today who has the 1st place in this space is MDEX. In mid-February PancakeSwap managed to take the top spot away from Uniswap, and even though it no longer owns it, it is still a major competitor in the DEX space.

The great growth of this decentralized platform is due to the high gas rates that the Ethereum network is charging its users, due to its congestion. Being Uniswap native to this network, it is most likely that in the short term it will continue to lose ground due to this disadvantage.

The monthly volume on PancakeSwap increased from just under $ 2 billion in January to almost $ 19 billion in February. In March the volume was around $ 17,000 million, so we can assure that it is not a Pump and Dump.

CAKE by PancakeSwap has plenty of room to grow

Although the price increase of this token was incredible, if we compare it with its direct competition, which is Uniswap, we see that it can grow much more.

With a price per CAKE of $ 17.55 and 150 million tokens in circulation, its market capitalization is $ 2,647 million. That figure is quite far from the $ 16,000 million capitalization that UNI has, even though they are quite similar tokens if we talk about qualities and scope.

This does not mean that PancakeSwap should reach this market size, but it does tell us about the possibility of growth that exists in this market.

There is one downside that may be hampering CAKE’s growth, and that is its weekly inflation rate of 3.78%, much higher than UNI’s 2% per year.

Even though the protocol implements some deflationary measures, which include large currency burns, CAKE’s annual inflation is approximately 37%.

The development team is aware of this disadvantage, so they continue to implement measures such as the recent decrease in reward per block.

The backing of the large exchange Binance, coupled with low fees on the BSC, gives PancakeSwap a good position in today’s DEX competition. Although Ethereum is working to bring a solution to high gas rates, it is not something that can be expected in the very short term.

CAKE technical analysis

When we look at the daily chart we notice that the bulls recently regained control.

During the past week the price kept falling slightly, but it seems that we are seeing the beginning of a new momentum.

After picking up demand in a small surrounding area at $ 15.5, CAKE may now be ready to test the all-time high.

CAKE vs BUSD daily price chart.  Source: TradingView.CAKE vs BUSD daily price chart.  Source: TradingView.CAKE vs BUSD daily price chart.  Source: TradingView.CAKE vs BUSD daily price chart. Source: TradingView.

Forecast

In the weekly time frame we can notice a clear medium-term uptrend, which recently made a correction towards the 61.8% Fibonacci.

Having made a healthy pullback, CAKE is now poised to hit new all-time highs with ease.

The first target will be $ 26.50, but knowing the strength of the previous trend, it is very likely that this price is short, so we may see a search for $ 34.50.

PancakeSwap's CAKE Forecast.  Source: TradingView.PancakeSwap's CAKE Forecast.  Source: TradingView.PancakeSwap's CAKE Forecast.  Source: TradingView. PancakeSwap’s CAKE Forecast. Source: TradingView.

All our publications are informative in nature, so in no case should they be followed as investment advice.

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