Berachain (BERA) price crashes to all-time lows as stablecoin market cap plunges

Berachain (BERA) price continued its strong sell-off, reaching its all-time low this week as the amount of stablecoins in the network

Berachain price continued its strong sell-off on Wednesday, reaching its lowest level this week as the amount of stablecoins in the network plunged. The BERA token dropped to a low of $2.95, dropping by 70% from its highest level this year.

This article explains why the BERA price is falling and whether it is safe to buy the dip.

Why Berachain price is falling

The ongoing BERA price crash has led to a $620 million wipeout as the market cap dropped to $344 million from $963 million following its airdrop. According to CoinMarketCap, there are 119.3 million BERA tokens in circulation against a total supply of 501.8 million tokens.

The cryptocurrency is highly dilutive because of its tokenomics. Berachain’s integrators will be unlocking 63.75 million BERA tokens valued at over $184 million on February 14. After that, the network will be releasing 13.28 million tokens, currently worth $38.4 million, every month.

Token unlocks are usually bearish because they lead to higher supply, a risky thing when there is no demand.

Berachain is also facing a liquidity crunch as the top players in its DeFi ecosystem are pulling back. According to DeFi Llama, there are stablecoins worth $356 million in the network, down from $1.34 billion a few months ago. This is a sign that activity in the network is struggling to gain traction.

Moreover, the amount of assets locked on the Berachain protocol has dropped sharply recently. There are 1.75 billion BERA tokens in the network, down from the year-to-date high of 2.04 billion.

Biggest movers in the Berachain ecosystem

The biggest players in the Berachain’s DeFi ecosystem, like Kodiak and Infrared Finance have shed assets in the last 30 days. On the other hand, Veda, Concrete, Beraborrow, and SatLayer’s assets have grown by double digits in the same period.

Berachain price also plunged after a $2.5 billion Boyco Vaults unlock on Tuesday. Boyco is a project in which the developers hoped to give dApps a way to secure deep liquidity before day one of the mainnet launch. This feature attracted over $2.5 billion across markets like ETH and wBTC.

The Boyco locks were opened on Tuesday, allowing users to receive BERA and liquidity provider (LP) receipts.

Berachain price analysis

The daily chart shows that the BERA price has been in a strong bear market in the past few months. It peaked at $9.6 in March and then dropped to $3 today.

The coin has fallen below the important support level at $4.90, its lowest level in February. It remains below all moving averages, while the Average Directional Index (ADX) has jumped, signaling that the downtrend is strong. Top oscillators like the Relative Strength Index (RSI) and the Stochastic have all pointed downwards.

Therefore, with the stablecoin market cap falling, there is a likelihood that the BERA price will continue falling, with the next point to watch being at $1.