As a seasoned analyst with a background spanning over two decades in the financial markets, I’ve seen my fair share of bull runs and bear markets. The recent plunge of Hamster Kombat’s HMSTR token, along with other tap-to-earn tokens, is reminiscent of the dot-com bubble burst in the late 90s, albeit in a different context.
The well-liked Telegram game “Hamster Kombat,” where players earn tokens by tapping, is facing difficulties due to the persistent drop in the value of its token, reaching record-low prices.
Hamster Kombat (HMSTR) token plunged to a record low of $0.0039, 70% lower than its all-time high of $0.0132. Its circulating market cap has dropped to $253 million, while its fully diluted valuation has slipped to $394 million.
As a researcher, I observed an unexpected drop in the value of the token despite its listing on major centralized platforms such as Binance, OKX, Bybit, and Bitget – some of the leading names in our industry.
The drop in value has occurred simultaneously with a sharp decrease in other ‘tap-to-earn’ tokens. Notcoin (NOT), the largest of these tokens, peaked at $0.029 in June but subsequently fell by 74%, reaching $0.0074.
The largest gaming token on Telegram, Catizen (CATI), has dropped by a staggering 63% since reaching its peak following its listing. Similarly, other tokens such as Pixelverse and DOGS (DOGS) have experienced a significant decline of more than 60% as well.
The fall of ‘to-earn’ tokens
Generally speaking, it’s been observed that the value of “earning” tokens usually decreases with time. For instance, digital currencies based on play-to-earn models such as Decentraland, The Sandbox, and Axie Infinity have seen significant drops (in double digits) from their peak values.
Initially, move-to-earn platforms were highly anticipated upon their release. One of the most popular among these was Sweatcoin, which frequently ranked high in downloads for both Google Play Store and Apple App Store. With a user base exceeding 50 million individuals, tokens were accrued just by walking or jogging. However, since its peak, the value of Sweat Economy, its native token, has plummeted more than 93%. Similarly, the price of GMT from StepN has also significantly decreased.
For Hamster Kombat, the issue lies in maintaining community involvement as its token experiences a collapse. However, according to the creators, those who choose to retain their HMSTR tokens within the game during this period will receive an increase in their tokens once the second season commences.
Hello there, esteemed CEOs,
— Hamster Kombat (@hamster_kombat) October 8, 2024
As an analyst, I’ve noticed a potential concern with Hamster Kombat: A significant number of its tokens remain locked, which could lead to considerable dilution for current holders over time. At present, there are approximately 63.3 billion tokens in circulation, but 37 billion of these are yet to be unlocked.
Adding more tokens to the circulating supply without a destruction mechanism in place can result in an increase in token supply, which is often referred to as “dilution.” This process weakens the value of each individual token because it makes them less scarce compared to the total supply available in the market.
The drop in prices is additionally driven by a general negative outlook within the cryptocurrency sector. While Bitcoin hovers around $60,000 to $62,000, many alternative coins have taken a step back.
Consequently, it’s possible that the Hamster Kombat token could recover if Bitcoin and other altcoins experience a resurgence. Furthermore, it’s worth noting that it has exhibited a falling wedge pattern on its four-hour chart, which is often interpreted as a bullish sign.
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2024-10-10 16:38