PancakeSwap (CAKE) Tests Support at $2.62 Despite Recent Supply Reduction Proposal
Darius Baruo Aug 01, 2025 14:09
CAKE price retreats 6.79% to $2.62 as profit-taking emerges following last week's 13% surge and supply reduction announcement.
Quick Take
• CAKE currently trading at $2.62 (-6.79% in 24h) • PancakeSwap's RSI at 49.41 signals neutral momentum with bearish MACD divergence • Token supply reduction proposal from 750M to 450M provides fundamental support despite short-term pullback
What's Driving PancakeSwap Price Today?
The CAKE price is experiencing a natural correction after last week's impressive 13.47% surge that pushed the token to $3.25 on July 28. This pullback appears to be profit-taking behavior following the excitement around Binance Coin's all-time high of $804, which had lifted the entire Binance Smart Chain ecosystem.
Despite today's decline, PancakeSwap's recent proposal to slash its maximum token supply from 750 million to 450 million continues to provide underlying fundamental support. This 40% reduction in maximum supply directly addresses long-standing inflation concerns and could create deflationary pressure on CAKE over the medium term.
The timing of this correction aligns with broader market dynamics, as traders who bought during last week's rally are now taking profits near resistance levels. However, the strong institutional adoption driving BNB's performance suggests that ecosystem projects like PancakeSwap remain well-positioned for continued growth.
CAKE Technical Analysis: Mixed Signals Emerge
PancakeSwap technical analysis reveals a complex picture with conflicting momentum indicators. CAKE's RSI sits at 49.41, placing it firmly in neutral territory and suggesting neither oversold nor overbought conditions. This reading indicates that the current pullback may have more room to develop before reaching oversold levels.
The MACD tells a more concerning story for short-term traders. With the MACD line at 0.1016 sitting below the signal line at 0.1205, and a negative histogram of -0.0189, bearish momentum is building for CAKE. This divergence suggests that sellers are gaining control in the near term.
However, the Stochastic oscillator presents an interesting contrast. With %K at 11.44 and %D at 24.06, PancakeSwap is approaching oversold territory, which could signal a potential bounce if buying interest emerges at current levels.
The moving average structure remains supportive of the longer-term bullish thesis. CAKE trades above its SMA 50 ($2.44) and SMA 200 ($2.21), indicating that the primary trend remains intact despite this short-term weakness.
PancakeSwap Price Levels: Key Support and Resistance
Current PancakeSwap support levels are critical for determining the next directional move. The immediate support at $2.31 represents the first major test for bulls, coinciding with the lower Bollinger Band at $2.35. A break below this zone could accelerate selling toward the strong support level at $1.94.
On the upside, CAKE resistance remains formidable at $3.31, which aligns with both immediate and strong resistance levels. This convergence suggests that any recovery attempt will face significant selling pressure at these levels.
The Bollinger Bands provide additional context, with CAKE's current position at 0.4045 (%B) indicating the price sits roughly 40% of the way between the lower and middle bands. This positioning suggests room for further downside movement before reaching oversold conditions.
Traders should watch the $2.70 pivot point closely, as it aligns with the 20-day SMA and represents a key inflection point for short-term direction.
Should You Buy CAKE Now? Risk-Reward Analysis
Based on Binance spot market data, different trading strategies emerge depending on risk tolerance and time horizon. For aggressive traders, the current CAKE price of $2.62 offers an interesting entry point if accompanied by strict risk management.
Short-term traders might consider waiting for CAKE's RSI to reach oversold levels below 30 before initiating long positions. The risk would be a stop-loss below $2.31, with initial targets at the pivot point of $2.70.
Medium-term investors could view any test of the $2.31-$2.35 support zone as an accumulation opportunity, particularly given the supply reduction proposal's potential long-term impact. However, position sizing should account for potential weakness toward $1.94 if broader market conditions deteriorate.
Conservative investors might prefer to wait for a clear break above $3.31 resistance before committing capital, as this would signal a resumption of the primary uptrend and reduce execution risk.
The 24-hour trading volume of $29.4 million on CAKE/USDT suggests adequate liquidity for most trading strategies, though large positions should still be scaled in gradually.
Conclusion
PancakeSwap faces a critical juncture as CAKE price tests key support levels following last week's rally. While the supply reduction proposal provides fundamental support, technical indicators suggest continued near-term weakness is possible. Traders should monitor the $2.31 support level closely, as a break below could trigger accelerated selling toward $1.94. Conversely, any bounce from current levels targeting the $2.70 pivot point could offer short-term trading opportunities for those managing risk appropriately.
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