Sonic token has recently fallen into a bear market, despite its decentralized finance (DeFi) ecosystem reaching unprecedented heights.
The price of Sonic (S) was trading at 50 cents on Saturday, marking a decline of approximately 50% from its all-time peak. This significant drop has resulted in a decrease in market capitalization, from $2.8 billion in February to $1.48 billion.
The decline in Sonic’s value comes even as its DeFi ecosystem has continued to thrive. The total value locked (TVL) in the ecosystem surged to a record $860 million this week. In Sonic terms, this translates to a TVL of 1.7 billion.
Interestingly, unlike many other chains, Sonic’s expansion is fueled by a variety of decentralized applications. Silo Finance boasts $202 million in assets, while AAVE V3 has amassed over $184 million shortly after its launch.
Other prominent players in the Sonic ecosystem include Avalon Labs, Shadow Exchange, and SwapX, with Beets and Veda leading as the top liquid staking platforms.
This upward trend may persist in the upcoming months as additional dApps launch on the network. A possible factor is that all developers are receiving approximately 90% of the network fees generated by their applications.
The growth of Sonic could pick up speed in the following weeks. Circle, the organization behind USD Coin (USDC), has indicated plans to integrate its stablecoin into the network, which is expected to increase the current stablecoin holdings of $255 million.
Additionally, Sonic has recently launched its physical and virtual card that allows users to make purchases with the S coin. As per the website, this card is accepted by over 130 million merchants globally.
These advancements come less than three months after the network underwent a rebranding. Formerly known as Fantom, the rebranding introduced enhancements such as improved transaction speed, increased throughput, smarter contract execution, and reduced costs.
Sonic Price Analysis
While Sonic possesses solid fundamentals, technical indicators suggest a potential breakdown may be imminent. The token has formed a rising wedge pattern, which features upward-spiraling and converging trendlines. This formation frequently precedes a significant breakdown.
Additionally, Sonic token appears to have established a head and shoulders pattern, with its neckline situated at $0.3795.
Consequently, there is a risk that the price might decline in the near term. If this occurs, it could fall to the critical support level at $0.3795, representing a 25% decrease from its current value.