Is ApeCoin a Good Investment?

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The Bored Ape Yacht Club (BAYC) proved to be one of the hottest non-fungible token (NFT) collections in 2021, solidifying itself as a key leader by market capitalization within the NFT space. However, despite the collection’s wild growth in 2021, the hype hasn’t faded. In 2022, the BAYC ecosystem has grown rapidly from increased adoption by celebrities such as Post Malone, the ecosystem’s purchase of the popular CryptoPunks collection and an ApeCoin airdrop to eligible members of the community.

ApeCoin is the native cryptocurrency of the BAYC ecosystem. Bored Ape holders were gifted over $100,000 in ApeCoin, while Mutant Ape holders were airdropped around $30,000 of the coin. After claiming, investors could either hold or sell for a profit. Those outside the BAYC ecosystem were able to get their feet wet by buying ApeCoin upon its launch. 

Despite the fact that ApeCoin is associated with Yuga Labs –– the company behind the intellectual property of the famous and pricey Bored Apes –– ApeCoin is a product of the ApeCoin decentralized autonomous organization (DAO). A DAO is a system that organizes people and their interests using the blockchain, which means that each token holder in the ApeCoin DAO has a say in the organization’s development. With a bright future ahead for the Bored Apes and BAYC associated projects, ApeCoin seems like a promising utility token for the trending ecosystem. 

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What is APE Token? 

ApeCoin’s official token (APE) will act as the utility token for the APE ecosystem, focusing on strengthening the BAYC community. A utility token can be interpreted as a token that enables users to perform actions or initiatives on a certain network. Effectively, APE gives its participants a currency that can be used without any centralized intermediaries. 

The Ape Token is an ERC-20 token, a particular type of custom-made cryptocurrency on the Ethereum blockchain. As an ERC-20 token, APE can be used in four main ways:

1. Incentivization: ApeCoin is a means for third-party developers to participate in the ecosystem by integrating APE into games, projects and other services. For example, APE Token is accepted in the Benji Bananas game by Animoca Brands. For 25 ApeCoins, you can buy a Benji Bananas Membership Pass, which allows you to earn an in-game token that can be swapped for APE.
2. Access: APE Token will function as a gating token, providing limited access to certain parts of the ecosystem such as exclusive events, games and merchandise.
3. Unification of Spend: ApeCoin is the utility token of the APE ecosystem, meaning that it can be used to purchase products and services such as play-to-earn games that BAYC are developing. 
4. Governance: ApeCoin is the governance token of the ApeCoin DAO, enabling holders of the token to vote on governance decisions within the DAO. 

The total supply of APE is locked at 1 billion tokens, so it is not possible to mint further tokens. The supply should never increase further than 1 billion. However, the developers created no ability to burn APE, meaning supply won’t decrease either. According to ApeCoin’s official website, Ape Token distribution is as follows: of the total supply, 62% belongs to the ecosystem fund, 16% is allocated to Yuga Labs and different charities, 14% goes to launch contributors and 8% is for BAYC founders. 

From the tokens allocated to the ecosystem fund, 150 million tokens were airdropped to holders of BAYC-related NFTs. The airdrop distribution depended on whether NFT owners held a Bored Ape or Mutant Ape and whether the NFT was paired with a Bored Ape Kennel Club NFT. The airdrop was allocated in the following proportions:

• Mutant ape = 2,042 tokens
• Mutant Ape + Kennel Club = 2,898 token
• Bored Ape NFT = 10,094 tokens
• Bored Ape + Kennel Club = 10,950 tokens

Interestingly, Yuga Labs claims zero responsibility for ApeCoin; however, the company is more than happy to take a significant portion of the profits. Since ApeCoin is coming from just ApeCoin DAO and not Yuga Labs, Yuga Labs can benefit from an independent entity allocating tokens to them as opposed to Yuga Labs pumping their own investments. However, this action is still a gray area as the U.S. Securities and Exchange Commission (SEC) still doesn’t oversee NFTs. 

APE Price History

At present, ApeCoin is ranked 37th in cryptocurrencies by market capitalization and reached an all time high of $39.40 in early 2022. This significant growth was predominantly driven by speculation that the "Otherside" metaverse land sale would be conducted in APE. The Otherside, created by Yuga Labs, is a new NFT metaverse project that launched on the 30th of April at a mint price of 305 APE.

ApeCoin Competition

ApeCoin can be classified as a fungible token investment into the non-fungible token (NFT) ecosystem. According to CoinGecko, ApeCoin is ranked eighth in top NFT coins by market capitalization. The biggest competitors to ApeCoin in the NFT and metaverse space are Axie Infinity, Decentraland and The Sandbox, the top three leaders in the NFT niche of the cryptocurrency market.

Unfortunately, given that ApeCoin is fairly new, Axie Infinity, Decentraland and The Sandbox benefit from a significant first-mover advantage. ApeCoin will need to work harder to gain market share and match its already existing competitors in terms of scale and partnerships. For example, BAYC co-founder Wylie Aronow stated that the goal is to create an interoperable word that is decentralized and gamified. However, ApeCoin has to compete with The Sandbox –– a gamified metaverse project that has already issued its second Alpha Pass, conducted virtual land sales and possesses partnerships with The Walking Dead, Adidas and Atari.

However, despite the lack of a first-mover advantage, a key competitive advantage ApeCoin possesses is its association with Yuga Labs, arguably the most influential presence in the NFT space. As a result, ApeCoin benefits from all the social capital associated with the Bored Ape Yacht Club, and all other projects in the Yuga Labs ecosystem.

How to Buy ApeCoin

APE is already listed and trading on major exchanges such as Coinbase Global Inc. (NASDAQ: COIN), Gemini, Crypto.com and Webull. However, at the time of the writing, Binance exchange possesses the most liquidity. The liquidity is centered around both APE/USDT and APE/BUSD trading pairs. This being said, any top exchange will have enough liquidity for retail traders to invest into the token.

Best Hardware Wallet For ApeCoin

As ApeCoin is an ERC-20 token, the Trezor hardware wallet supports it by default because it supports all ERC-20. Hardware wallets store your keys offline, keeping your funds safe from online hackers. Software wallets like MetaMask and Coinbase Wallet are great for everyday use, but hardware wallets should store the majority of your funds you don't plan to sell in the short-term.

Cryptocurrency Market Outlook

Looking ahead, Bitcoin bulls take aim at $45,000; however, some analysts warn about the formation of a bearish flag that could lead to a further price correction. If a correction occurs, the entire cryptocurrency market could continue to fluctuate within this short-term sideways channel that the market has been consolidating in for a while. This trend is expected given the continuously unclear macroeconomic conditions influencing cryptocurrency that make it impossible to precisely predict the direction of the market in the short term. 

Is ApeCoin a Good Investment?

In summary, ApeCoin is a high-risk investment that has potential to provide astronomical returns. In the short term, there is likely to be extremely high volatility due to speculation that Yuga Lab's "Otherside" virtual land sale will be priced in APE. As a result, a prudent investor may wait for ApeCoin to stabilize before entering if high volatility persists. Nonetheless, given BAYC’s popularity and high demand from price-insensitive investors such as athletes and celebrities, it is reasonable to assume that demand for APE will grow among investors if the BAYC ecosystem continues to successfully develop. If you believe that the BAYC ecosystem and Yuga Labs can thrive and outperform competitors in the future, ApeCoin could be a profitable way to capture the ecosystem’s increasing value.

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