Generated Title: Can Starknet's STRK Token Actually Sustain This Rally? Here's What the Data Says.
Starknet's Rocky Road and Recent Surge
Starknet’s STRK token is making headlines again, up over 20% today even as the broader crypto market is, shall we say, less than thrilled. This comes ahead of yet another round of STRK unlocks slated to begin in less than three weeks. Now, I've seen this movie before: token does well, narratives get spun, retail jumps in, and then...well, you know.
Let’s be clear: STRK has been a dog since its token generation event (TGE) in February 2024. Opening at roughly $2, it’s now trading around $0.17. That's a 96% haircut. Ouch. A recent CoinGecko chart shows a market capitalization of $770 million. The token has been mostly flat this year, until recently. It's up 40% over the last 30 days, and 26% today, despite the looming unlocks.
Since April, 127 million STRK (worth $21.5 million at current prices) have been entering circulation every month. The token is up 16% since April 1, but Bitcoin was trading around $85,000 back then, so take that with a grain of salt.
Amidst this increased supply, Starknet is touting staking milestones. They recently announced 900 million staked STRK, worth over $150 million, representing roughly 20% of the circulating supply. That's a decent chunk locked up, but is it enough to offset the ongoing supply inflation?
Bitcoin's Influence and the TVL Rebound
Interestingly, STRK’s recent performance coincides with a surge in privacy tokens like Zcash (ZEC) and Monero (XMR). Starknet’s co-founder, Eli Ben-Sasson, has ties to ZEC. Is there a correlation, or is it just crypto being crypto? (Spoiler alert: it's probably both.)
The chain's key metrics are also supposedly rebounding in Q4. Starknet is the sixth-largest Layer 2 by value secured, according to L2Beat, and its total value locked (TVL) is up 200% since its local bottom in July. But dig a little deeper, and you find that the Extended perpetual futures DEX accounts for just over 40% of Starknet’s TVL. Extended's TVL nearly doubled in October. This growth spurt was potentially fueled by perp DEX airdrop farming mania that began in September.
And this is the part of the report that I find genuinely puzzling. How much of this TVL growth is organic, and how much is simply mercenary capital chasing yield? The Starknet Foundation launched a yield program for Bitcoin deposits earlier this month, allocating 100 million STRK tokens (approximately $14 million) to participants. Since then, Starknet has added over $76 million in investor funds. Is this a sign of genuine product-market fit, or just yield-hungry capital hopping from chain to chain? Bitcoin on Starknet? Why investors poured $276m into the layer 2 blockchain
Ben-Sasson claims Starknet wants to maintain “Bitcoin’s monetary integrity while wiring it into a composable, liquid ecosystem." That sounds great in a white paper, but the execution is what matters. Starknet wants Bitcoin to function as both a balance-sheet asset and liquid working capital. The concept is sound, but the devil is always in the details.
Remember that Starknet suffered a nine-hour outage in September after upgrading to a new version called Grinta. The outage required two blockchain reorganizations, nullifying 1.5 hours of transaction activity. The team launched the S-two prover earlier this month, supposedly boosting speed and lowering transaction costs. Ben-Sasson calls these improvements “massively powerful,” but their impact has yet to be fully felt. A nine-hour outage doesn't exactly inspire confidence.
The price action is currently fluctuating between the $0.1956 ceiling from March 6 and the $0.0962 low from June 22. STRK is currently trading between the converging 50- and 200-day EMAs, after a near 8% rise on Thursday. If the price exceeds the 200-day EMA at $0.1618, it could target $0.1956. Conversely, if it slips below the 50-day EMA at $0.1291, it could drop to $0.9962—to be more exact, $0.0962.
One analyst suggests that STRK is breaking out from a 623-day resistance trend line and could increase by another 80%, potentially reaching $0.350. That's a bold claim. This analyst also notes that STRK has completed a five-wave downward movement since February 2024, suggesting either an upward A-B-C correction or a new five-wave upward movement. Both scenarios, according to this analysis, lead to higher prices. But technical analysis is more art than science. Starknet’s (STRK) Price Could Increase by Another 80% — Can It Clear This Resistance?
Incentive-Driven Hype?
So, can Starknet sustain this rally? The data paints a mixed picture. Increased TVL, driven by airdrop farming and Bitcoin yield programs, is certainly a positive. But how sticky is this capital? The looming token unlocks will continue to put downward pressure on the price. And the technical hiccups, like the September outage, raise questions about the network's stability.
Is This Rally Built on Shaky Ground?
Starknet's STRK token might be enjoying a moment in the sun, but the underlying data suggests this rally is built on a foundation of incentives and hype. Until the network can prove its stability and attract truly organic growth, I'm staying on the sidelines.
