SUI experienced a sharp drop on Oct. 4, emerging as the day’s largest loser, dropping over 15%.

According to data from crypto.news, Sui (SUI) plummeted from an intraday high of $1.97 on Oct. 3 to a low of $1.62, with its market capitalization falling from $5.46 billion to $4.45 billion. At press time, the token recovered slightly, trading at $1.78, still down 4% over the past 24 hours, with a market cap of $4.92 billion.

Token unlock and market volatility

SUI’s price movement coincided with the unlocking of 64.2 million tokens on Oct. 1, representing 2.4% of the circulating supply. Token unlocks can often trigger volatility as early investors or team members sell tokens to realize profits.

However, despite the large unlock, SUI’s price correction was relatively contained, likely due to the market’s optimistic outlook on the token, which had already rallied 115% in September.

The limited impact of the unlock reflects confidence in SUI’s long-term potential, with investors seemingly unwilling to part with their holdings. This sentiment is supported by the rapid growth and increasing utility within the SUI ecosystem.

Speculation on profit rotation to Aptos

Amidst the price correction, some analysts have speculated that traders may have shifted profits from SUI to its close competitor, Aptos (APT). Both SUI and Aptos are positioned as high-performance layer-1 blockchains, and such rotations between assets are common in the crypto market when traders seek to maximize short-term gains.

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maybe it’s time to rotate from one Solana killer to the next. I’ve heard that Aptos tech might be even better pic.twitter.com/LB8YeLNRBm

— Nay (@gmnay_) October 3, 2024

Despite the recent volatility, SUI’s underlying ecosystem continues to expand rapidly, driven by a surge in developer and user interest. 

Data from DefiLlama shows that the total value locked in the SUI ecosystem has soared to a new high of $1 billion, up from $383 million in August. This growth has seen SUI overtake more established blockchains such as Polygon and Avalanche in TVL rankings.

Several factors are fueling SUI’s recent growth. Grayscale’s launch of the SUI Trust in September opened the door for accredited investors to gain exposure to the token, adding serious momentum. 

At the same time, SUI’s strategic dive into the blockchain gaming world has turned heads, with Mysten Labs teaming up with Playtron to launch pre-orders for the SuiPlay0X1 console, a web3-native gaming device. Meanwhile, Circle, the company behind USDC, announced plans to bring the stablecoin to the SUI blockchain, boosting its potential for decentralized finance applications.

Sui’s latest partnership with Atoma brings decentralized AI to its network, leveraging Sui’s consensus and low transaction fees. The integration enables apps on Sui to incorporate open-source AI models with verifiability guarantees, supporting use cases like code generation, AI-powered non-fungible tokens, and automation in decentralized finance.

These collaborations seem to have propelled the token into the spotlight, with SUI ranking as a top trending search term on Google since the start of October.

SUI shows signs of recovery

From a technical perspective, SUI appears to be regaining bullish momentum. On the daily chart, SUI is positioned above the middle Bollinger Band at $1.55, indicating a potential upward trend, while the Relative Strength Index is approaching the overbought level.

The Average Directional Index, a key metric for assessing trend strength, has risen to 54 — well above the threshold of 25, which signals a strong trend. Additionally, the Moving Average Convergence Divergence indicator shows bullish momentum, with the two lines trending upwards.

These indicators suggest that SUI may continue its recovery, with the $2 mark acting as the next key resistance level. If the bullish momentum holds, the token could target its all-time high of $2.17, representing a 19% gain from current levels.