Merit Circle (MC) Token Price Quick Analysis

Check more of: Crypto


Summary, TL;DR

  • Expected increase in the MC token circulating supply of about 30% for the next two months
  • There could be a price floor in the range of 2-3USDT which is a significantly lower one than the current price of about 8.5USDT.

This is a sample of a particular way of thinking and an example of several, so to say pain, points an investor or a trader could take a look at when analyzing a particular investment opportunity. This analysis is strictly for educational purposes and is not an investment advice.

So, yesterday the Merit Circle (MC) token was listen on Binance. For a day it made almost a 50% movement down from about 12USDT to ~8USDT and on the next day tried to recover some of the losses.

What is Merit Circle?

As stated on their website Merit Circle is a a decentralized autonomous organization (DAO) “focused on developing the play-to-earn economy”. They currently have a subDAO invested in Axie Infinity with the intention to invest in other games of the Metaverse on a later stage. Binance also published its own research paper on the Merit Circle project.

Together with listing the token, Binance announced that it is adding the MC token to its Launchpool where participants could stake BNB, BUSD and MC to farm MC. For that they will earn MC as rewards. This seems to be in line with the Merit Circle DAO’s roadmap as stated in their documents about the MC token distribution.

So what about the MC token price?

So far so good. It even made me interested in taking a part of the journey. Then I looked at how the MC token was trading live on Binance. Below is a snapshot near the end of the “working” day:

MC token price, liquidity and order book

I can’t help but notice those big amounts of MC in the range of about 3000 – 6000 MC on the sell side. Where could they come from? Binance website states that for Dec. 03 there are little above 200 000 MC rewarded from the Launchpool. And those rewards are set at a predetermined rate, as stated in the exchange announcement linked above. So basically there could be more or less 200T new MC tokens on the supply side each day for the farming period. That period will end near the end of January 2022. The total amount of MC tokens expected to be farmed is 12.5M.

According to Coinmarketcap, the total amount of MC token circulating supply as of today is about 42.5M.

(12.5 / 42.5)*100 = 29.4%

The First Pain Point

Expected increase in the MC token circulating supply of about 30% for a short term period.

I am far from saying that all those new tokens will enter the market. But the supply is definitely increased. This, I believe, is a pain point worth noticing. It is a bottleneck that has the potential to suppress price appreciation in short term and needs to be paid attention to.

The Second Pain Point

There could be a price floor in the range of 2-3USDT which is a significantly lower one than the current price of about 8.5USDT.

This is both a good and a bad news.

It could be bad because the investors from the public round of the MC token distribution are sitting on more than 250% profit on their investments for a month. It would be no surprise if some of them decide to cash in some of those profits.

It could be a good news because that average price of $2.5-$3.2 could serve as a significantly strong floor which could be hard to break.

The Reasons

Let’s investigate a bit deeper.

In the Binance’s own research of the MC token we see:

Comparing that information with the one from the DAO’s own info about the Merit Circle token’s distribution:

  • Early Investors – the contributors that participated in our seed round – 14.06% (140,625,000 MC tokens)
  • Public distribution – tokens set aside for the public round – 4.10% (41,020,000 MC tokens)

I believe one can safely assume those are same things so we can get some price info from there to serve as an anchor price. Or a price floor. Keep in mind that it is normal the earlier the investors enter, the lower the price they pay for their tokens. I think we can ignore the average price the early investors have paid near the beginning of October, 2021, and which is about $0.3 (You wanna be an early investor, don’t you? 😀 Me, too. ) because even though they are currently sitting on massive profits, the history shows that they don’t sell so easily.

The other round, which ended about a month ago, was more of a public one and the average price achieved there was $2.59 with a closing at $3.20. Those are the tokens that are publicly distributed and consist the biggest part of the all amount (token circulating supply as would Coinmarketcap put it) which are available for trading. Merit Circle DAO’s expectations were that 75M would have been distributed but only 41M were sold. I believe that if the round happened after the Meta CEO announced his ideas about the Metaverse, those tokens could easily be overbought. But those are only speculations are we could not know now. What matters for the current situation is that there are no cliff vesting periods and no vesting at all for the investors in that public distribution. So those people or entities are also sitting on significant profits as of current prices and they have no incentive not to take some of those profits other than expecting that the price will continue to rise.

Basically, we have another possible source of supply. While the demand would depend more on how the Merit Circle DAO is managing its operations and the whole health of the Metaverse eco-system. In a situation like this I’d prefer to stay aside and watch how price develops on the following days or weeks because the risks seem to prevail on the profit potential.

Again, this is not an investment advice and this post is intended to serve as an educational vehicle and to show a way of thinking. You, the reader, are solely responsible for what you do or not do with your or not your money.

P.S. Featured photo (where it shows) by Michael Förtsch on Unsplash

Your email address will not be published or shared. Mandatory fields are marked with *