On the Litebit exchange, the cake price surged on Thursday. Here’s why.
It all started with a rapid drop in CAKE’s price of 15.38% on Tuesday. The project developers made a change to the method by which CAKE token holders can get a return on their investment on their staking, and it was not well received.
Staking is a method used by cryptocurrency investors to earn passive income by participating in network security. As of Tuesday, CAKE token holders can earn returns with a staking flexible or staking with a CAKE lock for a given duration.
According to the developers, 15% of the CAKE tokens stored in the new pools were for a longer or shorter fixed term, thus taking advantage of the significantly higher returns. However, most CAKE holders opt for flexible staking where CAKE tokens can be withdrawn after 72 hours. So there seems to be at least a bit of trepidation in committing to holding tokens for a long time.
Additionally, DeFi Llama claims that the overall amount of staked CAKE tokens has decreased in recent days. This could mean that holders prefer the old system.
Bounce off support at $7.5
In reaction to Wednesday’s decline, the price of the CAKE token bounced off the support at $7.5. CAKE/USD gained 9% on Thursday, however the bullish momentum has faded a bit due to the downside pressure currently in the markets. It is also important to note that CAKE has been in a downtrend since peaking at $45 in May 2021.