SUI price drops 70% from market debut top amid excessive supply concerns

The price of Sui (SUI) has dropped sharply after its market debut across leading cryptocurrency exchanges.

On May 5, the SUI price was $1.26 per token, down about 70% from its record high of around $4, established two days ago on Binance.

Interestingly, on other exchanges like Kraken, the token’s market top was $1.60 or lower, suggesting it was in “price discovery” mode after the launch.

SUI/USD daily price chart. Source: TradingView

Still, SUI maintains its overall market gains, up nearly 1,200% from its market debut.

Early SUI price fundamentals

SUI’s initial uptrend drew support from traders who view Sui — a new entry into the long list of layer-1 blockchain projects — as potentially more scalable than its rivals.

Mysten Labs, Sui’s original contributor, asserts that it will become the first internet-scale programmable blockchain platform thanks to its claims of processing about 300,000 transactions per second. In comparison, Solana handles up to 10,000 transactions per second.

Venture capitalists led by Andreessen Horowitz and FTX Ventures have invested $336 million in the Sui project via two investment rounds in 2021 and 2022. Mysten Labs confirmed that the rounds gave investors access to its firm’s equities, not SUI tokens.

However, the project’s token economics shows that it has allocated 14% of its 10 billion SUI supply to investors. Mysten Labs has not yet revealed when it will distribute these tokens or any associated vesting schedule.

SUI token distribution model as of May 1. Source: Messari

Regarding FTX Ventures, a subsidiary of the now-defunct FTX crypto exchange, Mysten Labs repurchased the stake held by the firm in April 2023. Furthermore, it took back the rights to buy SUI tokens previously held by FTX for about $96 million.

SUI supply overload?

Traders and analysts have shown their conviction in the Sui project’s goals to become an attractive blockchain alternative. However, there are also concerns about SUI’s supply schedule.

Related: What is Tokenomics? A beginner’s guide on supply and demand of cryptocurrencies

Notably, the Sui Foundation plans to increase the SUI supply by approximately 15% by the end of 2023, which, according to analyst Dmitriy Lavrov, could prompt traders to wait for further price declines before entering the market.

From a short-term technical perspective, the SUI price faces interim sell-off pressure near $1.31.

A pullback scenario could have the token eye $1.26 as its short-term downside target. And suppose the oversupply scenario prevails. Then, the price could drop to $1.21 on May 5 or over the weekend, down 7% from current prices. 

SUI/USD 15-minute price chart. Source: TradingView

Conversely, analyst Ameba sees SUI rising toward $1.50 in May based on its decisive close above its descending trendline resistance. Fellow trader Crypto Mikey projects a similar uptrend for the Sui price.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.