The cryptocurrency MOON, closely associated with the social media platform Reddit, has witnessed a staggering 90% drop in its value, leaving the community in an uproar. The collapse, as showcased in the recent trading charts, has left many investors and enthusiasts bewildered and questioning Reddit's recent moves.
The price chart of MOONUSD depicts a clear and stark downturn, with the token plummeting from highs of approximately $0.65 to recent lows close to $0.05. Such a swift and deep descent inevitably raises questions about the catalysts behind this downward spiral.
A deep dive into the reasons for this sharp decline points to a recent announcement made by Reddit. The platform announced its decision to sunset the Community Points beta by early November. This means users will no longer earn any more points in their Reddit Vault. This is particularly significant as the Community Points system was one of the primary utilities of MOON, driving demand and incentivizing user engagement on the platform. The intrinsic value proposition of MOON was, in many respects, tied to this ecosystem.
Reddit cited scalability limitations and the evolving regulatory environment as the primary reasons behind the discontinuation of the Community Points system. The inability to scale the product to meet demand across the platform and the decision to divert resources to other features like the Contributor Program and subreddit karma has rubbed the community the wrong way.
Returning to the chart, it is evident that trading volume has significantly increased during this period of decline. This surge in volume can be interpreted as a mass exodus or sell-off, from disillusioned investors trying to cut their losses. The long bearish candles, accompanied by high trading volumes, paint a picture of panic selling, which further accelerates the decline.