Safemoon was launched in March 2021, with the founders designing the protocol to incentivize holding and discourage selling. The cryptocurrency caught the attention of many notable celebrities, including former Backstreet Boys member Nick Carter and rapper Lil’ Yachty. This brought in more interest in the token, and the price has shot up ever since. The market capitalization of SafeMoon is nearly $2 billion, and volumes have been rising as well.
So why is SafeMoon trending?
The hashtag #safemoonsqueeze has been trending for the past few days due to the post on r/SatoshiStreetBets – a crypto subreddit inspired by the infamous r/WallStreetBets.
The post by the user u/GMEandAMCbroughtme titled “The #SafemoonSqueeze has begun” lists out ten key points explaining the motivation and method for this announcement.
The first and key point that most SafeMoon backers vehemently agree with is SafeMoon’s inherently hyper deflationary nature. SafeMoon is unique crypto in the way it deals with transactions. Every time you sell SafeMoon you are charged a 10% transaction fee. Cryptocurrencies were built to provide efficiency and ease of transactions. Then why such a high fee, one might ask.
The idea is simple, to disincentive selling and subsequently lower the number of transactions. This is in line with the HODL strategy many crypto enthusiasts believe in.
Large returns in crypto are to be made only by holding your crypto for a long period of time. Of the 10% transaction fee, 5% goes to the existing token holders. This means that the system not only punishes token sellers but rewards token holders.
SafeMoon’s official website states that holders can earn passive income by using the static reflection protocol even as they watch the value of their SafeMoon grow continuously. As you must have guessed, this feature is unique to SafeMoon and hasn’t been a part of any of the major cryptocurrencies. When it comes to burning the existing token, it does so manually rather than digitally. This ensures control of the supply and makes rewarding token holders much easier.
The Reddit post makes a very strong case that due to the deflationary nature of SafeMoon, the supply of the token will be limited, which will lead to a sharp increase in the price of the token. The post also points out that SafeMoon is a platform in itself and not just a token.
“The #SafemoonSqueeze has begun” post is tagged under the news category and has so far received more than 2.5k upvotes and more than 1300 comments.
While this might sound similar to the AMC and GME short squeeze that happened in the US stock markets, the idea here is slightly different. There are no short positions in SafeMoon. That is to say, no one has borrowed and sold SafeMoon in the hope that the price of the token will crash. In a short squeeze, investors try to attach such short positions by increasing the price, forcing the shorts to exit.
The movement to increase SafeMoon’s price has different motivations. As quoted below, point 7 of the post claims that the developers of the token have been unfairly targeted. The squeeze attempts to take revenge on the detractors of the token who had slandered the developers.
Safemoon is under attack. The Devs have been slandered, ridiculed, and mocked. They have undeservingly been accused of being every bad thing under the sun. We will avenge them. We are Safemoon.
What does the price chart tell us?
SafeMoon price witnessed a sharp sell-off from June 15. The price breached its previous low of the range that was established on 23rd May this year. But it is likely that this deviation will be short-term. There is a high probability that the price level will see some reversion to mean which will imply a significant upside from current levels.
The range low, as discussed, has been pushed to $0.00000257. SafeMoon has witnessed a significant price appreciation over the past few hours which might indicate the start of the reversion move. Investors can also expect the token price to test the Fibonacci retracement at a 50% level, which is at the $0.00000470 price. That would indicate an up move of nearly 60% from the previous support level at $0.00000295.
Safemoon also created a new range low around 20th and 22nd June when it crashed by about 30%. This has also led to its Relative Strength Indicator (RSI) level to drop below 30, which indicates an oversold level, typically predicting a bounce-back by virtue of mean reversion. The previous instance of RSI falling below 30 was on 23rd May. This was followed by a whopping 88% rally. So history also seems to be an indication of strong bounce-back potential.
So from a technical analysis perspective, SafeMoon price can be expected to move higher. However, there are a couple of critical resistance levels at $0.00000338 and $0.00000412. If SafeMoon is able to take out these levels, then it is likely to see very strong momentum. On the other hand, should it get stymied on any of these levels, there is a risk of stagnation in the price or even a drop. The price may then fall to the immediate support level at $0.00000198.
How to buy SafeMoon?
SafeMoon’s website states that the PancakeSwap is the primary exchange to buy SafeMoon tokens. In order to buy the tokens, one must first create a trusted wallet. The next step is to then convert BNB (Binance Coin) to a smart chain using the trusted wallet. PancakeSwap can then be used to convert the BNB into SafeMoon. In case one wishes to understand the process in more detail, it is explained on the official website as well.