According to a market analyst, the STEPN move-to-earn model is neither scalable or sustainable in the long term, and has a massive barrier to entry due to it’s expensive sneaker NFTs
The price of STEPN (GMT) has seen a massive drop in the last 30 days, but it appears the downtrend may reversing.
GMT’s price has rebounded by nearly 35% — from $0.80 on May 27th to $0.99 on May 28th. Interestingly, the upside retracement started after the price fell in the same range, which had acted as support before GMT’s 500% and 120% price rallies in March and early May, respectively.
In addition, the rebound further preceded an 80% drop from its record high of $4.50, established on April 27th, which left GMT oversold, according to its daily relative strength index (RSI) reading that slipped below the oversold threshold of 30 on May 26th.
The technical support, in addition to oversold RSI, suggests GMT is in the process of bottoming out.
GMT resistance and support levels
Drawing a Fibonacci retracement graph from GMT’s $0.0099-swing low to $3.82-swing high leaves the token inside a broader consolidation range, defined by the 0.382 Fib line near $1.50 acting as interim resistance, while the 0.786 Fib line near $0.82 serves as interim support.
Therefore, an extended rebound move from the $0.82-support level brings $1.50 into the attention as the next upside target, up about 40% from the price on May 28th. Furthermore, a strong upside follow-up could send the STEPN token price toward the $2.00-2.50 range, suggesting that the market has bottomed out.
On the other hand, a weaker upside follow-up could have GMT’s price retest $0.82 for a possible breakdown move toward $0.54. This level was instrumental in capping the token’s downside attempts between March 17th and March 21st.
STEPN is trading in tandem with Bitcoin
From the fundamental perspective, GMT’s bias looks skewed to the downside.
First, the token continues to trade in near-perfect tandem with Bitcoin (BTC) and the other top market cap cryptocurrencies, according to their daily correlation coefficient readings, which topped 0.98 on May 21st but had subsided to 0.75 on May 28th.
Therefore, if Bitcoin continues to struggle below $30,000, as many analysts believe, it could take GMT lower due to its consistent positive correlation with BTC.
Second, GMT could drop due to the rising uncertainties surrounding STEPN’s business model, which involves paying users for exercising either by walking, jogging or running with the native Green Satoshi Tokens (GST).
Market Analyst believes STEPN is not scalable or sustainable
Mike Fay, an independent market analyst and the author of the “Heretic Speculator” financial newsletter, says that STEPN’s so-called move-to-earn model is neither scalable nor sustainable in the long term.
The analyst cited some core issues with the “lifestyle app.”
First, STEPN has a massive barrier to entry, because new users must acquire its expensive Sneaker NFTs. Even then, people purchase these digital issues for hundreds or thousands of dollars in anticipation that they would recover their investments by earning and selling GST tokens.
Many users have however already recouped their money, such as YouTuber Sebbyverse, who claims that he earned $219 worth of GST tokens just by walking 15 minutes to and from dinner.
Another factor that will affect STEPN’s future growth rate is their announcement that they will stop supporting users in China on July 15th.
Will the last people in serve as ‘exit liquidity’ for STEPN early adopters?
“The way this likely ends is with the last people who come into the platform essentially serving as ‘exit liquidity’ for the early adopters when the app’s in-game payment token collapses,” Fay said while highlighting that the STEPN’s in-house token is already crashing.
That would hurt users’ return on investment who paid thousands of dollars for Sneaker NFTs. So, if the demand for NFTs dries up and incentive drops, STEPN would have trouble attracting new players to its app, thus dampening demand for GMT, according to Fay. He added:
“STEPN is in a hype-driven speculative frenzy and I’m not touching any of this. Not the payout token (GST-USD), the governance token GMT, or the NFTs.”
Image: Pixabay, Charts: TradingView.com
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