Solayer (LAYER) Token Unlock Causes Price Plunge, Reaching New All-Time Lows

Solayer (LAYER) has been a hot topic in the crypto sphere, with its rapid ascent and subsequent crash leaving many stunned. The token, known for its impressive gains, especially in monthly and weekly increases, quickly became a favorite among traders.

However, this all changed on May 6, when the LAYER price suffered a 35% decline in just a few hours, sparking widespread panic. As the dust settles, let's delve into the potential reasons behind this steep fall.

Layer Token Unlock

Community members are shocked at the price decline, but Onchainquant noted that a large whale exited during the Asia session five days before the unlock.

The user built a massive shor t via perpetual futures, causing the funding rate to go negative.

Then, he slowly started to unwind his long position, profiting heavily from the short position and offsetting the losses from the funding rate.

The price decline occurred five days before unlocking over 27 million tokens, nearly 13% of the supply.

This is a cliff unlock that will primarily benefit the foundation. It will also trigger a linear vesting schedule, with 9,375 million tokens released to the foundation every three months until 2030, significantly increasing token inflation.

Why Did LAYER Plunge?

The LAYER price has increased rapidly since April 9, when it broke out of an ascending parallel channel. Solayer’s increase led to a new all-time high price of $3.41 on May 5. As predicted last week, the LAYER price crashed after the high.

As long as the price trades inside the channel, it allows for a fourth-wave pullback and a new high.

Moreover, technical indicators are bearish. The Relative Strength Index (RSI) and Moving Average Convergence/Divergence (MACD) are falling.

The former generated a bearish divergence and is below 50, while the latter made a bearish cross (black circle).

So, the daily time frame makes it unclear whether LAYER will fall to new lows. Whether the price breaks down from its ascending parallel channel or bounces is key to what will happen.

Token unlock and increasing emission may have played a part in a whale exiting their large position.

While the LAYER price is technically still in wave four, the shape of the decline and the negative news cast doubt on whether the rally can continue.

A breakdown from the ascending parallel channel could cause LAYER to crash to new lows.input: Key Takeaways

Solayer (LAYER) debuted on Feb. 11 and immediately began its ascent, continually reaching new all-time highs in April and May.

At one point, LAYER paced the crypto market in monthly and weekly increases.

However, this all changed on May 6, when a 35% decline in just a few hours caused widespread panic.

Let’s examine the reasons behind this decline.

Community members are shocked at the price decline, but Onchainquant noted that a large whale exited during the Asia session five days before the unlock. The user built a massive shor t via perpetual futures, causing the funding rate to go negative.

Then, he slowly started to unwind his long position, profiting heavily from the short position and offsetting the losses from the funding rate. The decline occurred five days before unlocking over 27 million tokens, nearly 13% of the supply. This is a cliff unlock that will primarily benefit the foundation. It will also trigger a linear vesting schedule, with 9,375 million tokens released to the foundation every three months until 2030, significantly increasing token inflation.

Solayer’s increase began after the price broke out of the ascending parallel channel on April 9.

As long as the price trades inside the channel, it allows for a fourth-wave pullback and a new high. However, technical indicators are bearish. The RSI and MACD are falling. The former generated a bearish divergence and is below 50, while the latter made a bearish cross (black circle).

The daily time frame makes it unclear whether LAYER will fall to new lows or not. It is crucial to watch whether the price breaks down from the ascending parallel channel or bounces.

The rapid increase in Solayer (LAYER) price has stalled, leading to a steep decline. The token, which had been a star performer in recent months, fell 35% in just a few hours on May 6, wiping out nearly all of its gains for the year so far.

At one point, LAYER was pacing the crypto market in monthly and weekly increases. However, this all changed when the token faced a strong rejection at the $3.40 resistance.

Moreover, technical indicators suggest that the LAYER price may continue to fall. The RSI generated a bearish divergence and is below 50.

The MACD also made a bearish cross, which could lead to further declines in