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Calling a bottom for SPS has been an inflationary business
I have said it before and SPS went lower, lower, oh yeah and lower. But I am finally confident that SPS all time low was at 1.5 cents which is crazy to start with. I have always said that SPS at these levels was comically oversold since anyone who earned SPS and bought it over the last 2 years had lost up to 98% of it's value. Someone new entering the market could buy a stake with a couple of grands that was equivalent to 2 years of hodling. The market usually doesn't allow for such an opportunity to last very long.
Before I continue let me start with the biggest caveat for SPS: Inflation for SPS is still incredibly high with around 1M tokens printed daily! You should always keep this in mind. What this means is that SPS will very likely not skyrocket and do anything crazy like a 10x in a short time span. Instead, SPS is now more likely on a gradual, but sustainable path to higher highs. The sustainable part has yet to be tested, but I think there are a couple of reasons why SPS is on a general uptrend:
- SPS now has an actual use case with the staking "requirements" announced and implemented some days ago. It is worth mentioning that this came very late. The team should have focused much sooner on implementing this. Since this implementation SPS is already up over 10% and more importantly broke out of the falling wedge (more on this later).
- Even with 1B+ SPS out there (600M staked) there is not enough SPS for everyone getting a maximum booster for their league. This is actually pretty big, thanks for @aftersound who mentioned it recently. This of course means that 1B is not as much of a supply as I thought (of course the team picked high numbers for "requirements" to have this effect). Also, one has to keep in mind that SPS' total supply will be 3B, so there are still around 2B to distribute over the next years
- LAND 1.5 and 2.0 as well as Soulkeep have the ability to bring DEC eventually to its peg and attract many new players. This could eventually trigger the "fly wheel" as well as soak up more SPS from players wanting to acquire more to earn more
TA
In the last post I showed you some charts which indicate a bottom on a TA level as well.
This chart seems to be quite accurate. It also shows that we shouldn't expect SPS shooting up like a rocket in the near future. Instead, expect a more gradual increase.
More importantly, SPS has broken out of the falling wedge. It is important to point out that this happened several times in the past, but with a bottom now possibly in, the price action should finally take us outside of this wedge for good. The wedge is seen here in blue. The green lines could indicate the reversal.
The bottom support of the green channel in actually already based on the recent price action and could hold. This support is nothing spectacular, but what we need for SPS is a sustainable positive price action which is what this trend line could give us. It has about a 9% increase per month and gives us a price of around 2.7 cents for new year.
The top resistance of this possible new channel is more unclear. It seems reasonable to draw it like this, but we'll have to see how it turns out. If so, the average price within it would be at around 3.7 cents for new year.
Conclusion
SPS has finally received it's main use case by having a soft requirement to earn SPS. There are some obvious challenges still waiting with the biggest one being whether or not Splinterlands as a whole will be able to attract new players and if it can continue to strengthen its economy. But the roadmap looks good and there are many new things coming quite soon to get us excited.
As a general reminder: Please keep in mind that none of this is official investment advice! Crypto trading entails a great deal of risk; never spend money that you can't afford to lose!
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