Ben GCrypto, the CEO of Generation Crypto Media Channel said it showed a growth of 1,517% last year and noted it also came top based on market capitalisation as well. Of course at its peak last year the growth in CAKE was around 6,000%. But since August it has been on the slide to today's (19 January) price of $10.49, some 76% off that high of $44+.
Can the price return to an upward trajectory over the longer term? Is now the time to ‘buy’, ‘hold’ or ‘sell’?
In this article, we look at recent developments in the PancakeSwap ecosystem, latest CAKE coin news and the long-term outlook.
How does PancakeSwap work?
Whereas centralised exchanges like Coinbase and Binance (which was banned in the UK earlier this year) are run by a single company, one can trade on a DEX without an intermediary. Like most decentralised finance (DeFi) activity to date, most DEXs are based on Ethereum. PancakeSwap, however, aims to compete with Ethereum by providing lower fees and faster transactions, among other features.
PancakeSwap operates an automated market maker (AMM) model. Users deposit their funds into a liquidity pool in exchange for income from liquidity provider tokens, known as FLIP tokens. Users make their trades against the liquidity pool. Holders of FLIP tokens can then use them to reclaim their share of the liquidity pool, and a share of trading fees. Users can deposit and lock up their FLIP tokens to farm, or earn, additional tokens such as CAKE and SYRUP, as a reward. There is no set holding time before tokens can be un-staked.
PancakeSwap has quickly attracted users since its launch because it allows traders to instantly swap tokens without registering for accounts and charges low transaction fees. Users can trade directly from their cryptocurrency wallet, as the cryptocurrency is not held on an exchange.
According to its website in total its users have staked $12bn, and its 2.8 million active users made 31 million trades in the last 30 days. Although it is unclear how frequently these numbers are updated. One might be forgiven for thinking if PancakeSwap went to the trouble of putting a counter on its web site and then did not update the figures then the reality is possibly not that impressive.
PancakeSwap launches NFT Market
PancakeSwap’s non-fungible token (NFT) marketplace went live on 30 September 2020, delayed from its 22 September launch date. NFT sales took off in 2021, with seven-day sales surpassing $1.6bn in late August and moving up to $685m in October after dipping to $270m in mid-September, data compiled by NonFungible.com shows. In the 30 days before 17 December it reported total NFT sales of $1.488bn.
All the fees from the marketplace and NFTs, or 2% of each trade, will be used to buy back and burn CAKE coins. Users will need to hold CAKE coins to mint, or create, NFTs, which could increase demand for the PancakeSwap token, while coin burning will reduce supply. That is expected to provide support for the price.
In the first month, the market reached a trading volume of over 102,208 BNB coins, worth around $56.6m, of which 2,044 BNB were used to buy back and burn CAKE. The developers are working on Phase 2 of the marketplace, which will include the ability to buy and sell third-party Binance Smart Chain NFTs.
Users voted in October to reduce the amount of CAKE tokens entering circulation from 15 per block to 14.5 per block, which will further reduce supply.
PancakeSwap has run several Initial Farm Offerings (IFOs) in recent weeks, providing early access to new tokens as soon as they are added to the exchange. The developers are looking at removing the need for users to create CAKE-BNB liquidity pools to join IFOs. They are also evaluating suggestions for “NFT utility, staking requirements, and varying weights of the two pools. Developing these updates takes time and development resources, so you can expect gradual improvements as we bring new IFOs to the table rather than one large change all at once,” they wrote in their monthly update blog post.
CAKE price stalls after cryptos bottom out
The CAKE price climbed to $26.59 on 26 August from its 20 July low of $10.87, but fell to $17.85 on 8 September. The market moved back up to $23.72 on 19 September, but unlike other cryptocurrencies such as bitcoin (BTC) and ether (ETH), which hit new all-time highs, the CAKE price declined in October, ending the month at $17.68, as the chart shows.
The current (19 January) price of $10.5 remains well below its all-time high of $44.18 on 30 April, reached during a crypto rally. It leaves it with a market capitalisation of $2.72bn ranking it the 51st biggest cryptocurrency according to CoinMarketCap.
What’s the possible outlook for the future price of the PancakeSwap token?
CAKE coin price prediction: can the price rebound in the long term?
At the time of writing, technical CAKE coin analysis from CoinCodex remains bearish, with one indicator giving bullish signals and 23 bearish. Its PancakeSwap (CAKE) coin prediction estimated the price could fall slightly to $10.34 by 24 January .
The CAKE crypto price prediction from algorithm-based site Wallet Investor are bearish estimating that the price could fall to $10.37 by the start of 2023 and move on to $3.87 by this time in January 2027.
DigitalCoin’s CAKE token price prediction suggested that the cryptocurrency could average $13.81 in 2022, rising to $22.5 in 2025 and reaching an average of $38 in 2028.
The CAKE/USD forecast from Price Prediction was more bullish for the longer term, projecting that the price could rise from an average of $15.33 in 2022 to $46.6 by 2025 and $287 by 2030.
On the other hand, Coin Price Forecast was more cautious in its long-term projection than Price Prediction, expecting the CAKE token price to end 2022 at $14.71, $15.51 in 2023, $22.27 in 2025 and by 2030 may be as high as $35.6
It’s important to keep in mind that cryptocurrency markets remain extremely volatile, making it difficult to accurately predict what a coin’s price will be in a few hours, and even harder to give long-term estimates. As such, analysts and forecasting websites can and do get their predictions wrong.
We recommend that you always do your own research, and consider the latest market trends, news, technical and fundamental analysis, and expert opinion before making any investment decision. You should also be aware that the past price performance is no guarantee of future returns and never invest more than you can afford to lose.
Cryptocurrency auditing company Certik gave PancakeSwap a security score of 94 in its audit for the last month (to 19 January).
However, whether PancakeSwap is safe for your portfolio is a decision only you can make. Always do your own research.
When it comes to a highly volatile asset like a cryptocurrency token, it’s important that you do your own research to determine whether it’s a suitable fit for your investment portfolio. The decision depends on your risk tolerance and financial circumstances, among other personal factors. Keep in mind that you should never invest more than you can afford to lose.
Forecasts from prediction sites, like Price Prediction, estimate that the CAKE price could rise over the long-term - such as $287 by 2030. Whether you believe those predictions is a decision only you can make. Keep in mind that analysts and forecasting websites can and do get their predictions wrong.
The future of the CAKE cryptocurrency will depend on the use of the PancakeSwap exchange. Other exchanges could emerge that cryptocurrency traders opt to use instead. The value of the coin will also depend on sentiment on the broader crypto markets in the future, among other factors.
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.