The SUI token has experienced a significant drop in price after its market debut on leading cryptocurrency exchanges. Just two days after establishing a record high of around $4 on Binance, SUI’s price dropped about 70% to $1.26 per token on May 5. However, on Kraken and other exchanges, its market cap was $1.60 or lower, indicating it was in “price discovery” mode after the launch. Despite the drop, SUI has still gained nearly 1,200% from its debut.
SUI is a new entry into the long list of layer-1 blockchain projects, and its initial uptrend was fueled by traders who saw it as potentially more scalable than its competitors. SUI’s original contributor, Mysten Labs, claims that it will become the first internet-scale programmable blockchain platform, capable of processing about 300,000 transactions per second compared to Solana’s 10,000 transactions per second.
Venture capitalists, including Andreessen Horowitz and FTX Ventures, have invested $336 million in the SUI project via two investment rounds in 2021 and 2022, giving them access to Mysten Labs’ equities rather than SUI tokens. However, the project’s token economics allocates 14% of its 10 billion SUI supply to investors, with no clear timeline for distribution or vesting schedule.
While traders and analysts are optimistic about SUI’s potential as a blockchain alternative, there are concerns about the project’s supply schedule. The Sui Foundation plans to increase the SUI supply by approximately 15% by the end of 2023, which could prompt traders to wait for further price declines before entering the market.
From a short-term technical perspective, SUI’s price faces interim sell-off pressure near $1.31, with a potential pullback scenario seeing the token target $1.26 as its short-term downside. If oversupply prevails, the price could drop to $1.21 on May 5 or over the weekend, down 7% from current prices. However, analysts Ameba and Crypto Mikey both see SUI rising toward $1.50 in May based on a decisive close above its descending trendline resistance.