The circulating supply of SUI tokens will grow by nearly 15% by the end of 2023.
The price of Sui (SUI) has dropped sharply after its market debut across leading cryptocurrency exchanges.
On May 5, SUI price was $1.26 per token, down about 70% from its record high of around $4, established two days ago on Binance.
Interestingly, on other exchanges like Kraken, the token’s market top was $1.60 or lower, suggesting it was in “price discovery” mode after the launch.
Still, SUI maintains its overall market gains, up nearly 1,200% from its market debut.
Early SUI price fundamentals
SUI’s initial uptrend draws support from traders who view Sui — a new entry into the long list of layer-one blockchain projects — as potentially more scalable than its rivals.
Mysten Labs, Sui’s original contributor, asserts that it will become the first internet-scale programmable blockchain platform thanks to its claims of processing about 300,000 transactions per second. In comparison, Solana (SOL) handles up to 10,000 transactions per second.
Venture capitalists led by a16z and FTX Ventures have invested $336 million in the Sui project via two investment rounds in 2021 and 2022. Mysten Labs confirmed that the rounds gave investors access to their firm’s equities, not SUI tokens.
However, the project’s token economics shows that it has allocated 14% of its 10 billion SUI supply to investors. Mysten Labs has not revealed when it would distribute these tokens or any vesting schedule associated with them yet.
Regarding FTX Ventures, a subsidiary of the now-defunct FTX crypto exchange, Mysten Labs repurchased the stakes held by the firm in April 2023. Furthermore, it took back the rights to buy SUI tokens previously held by FTX for about $96 million.
SUI supply overload?
Traders and analysts have shown their conviction in the Sui project’s goals to become an attractive blockchain alternative. However, there are also concerns about SUI’s supply schedule.
Related: What is Tokenomics? A beginner’s guide on supply and demand of cryptocurrencies
Notably, the Sui Foundation plans to increase the SUI supply by approximately 15% by the end of 2023, which, according to analyst Dmitriy Lavrov, could prompt traders to wait for further price declines before entering the market.
Yes, it makes sense to wait for better prices.
— Dmitriy Lavrov (@thedlavrov) May 3, 2023
From a short-term technical perspective, the SUI price faces interim selloff pressure near $1.31.
A pullback scenario could have the token eye $1.26 as its short-term downside target. And suppose the oversupply scenario prevails. Then, the price could drop to $1.21 on May 5 or over the weekend, down 7% from current prices.Â
Conversely, analyst Ameba sees SUI rising toward $1.50 in May based on its decisive close above its descending trendline resistance. Fellow trader Crypto Mikey projects a similar uptrend for Sui price.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
