PENGU rallies ahead of the Abstract mainnet launch, though a potential correction may be on the horizon

PENGU, the meme coin backed by the popular Pudgy Penguins NFT collection, has experienced a notable rally on January 23, 2025, following a period of bottoming out earlier in the week. This surge in price has made it one of the top-performing cryptocurrencies among the largest 100 tokens by market cap, with the Pudgy Penguins token climbing by 8.7% to an intraday high of $0.0264. This rally, in the context of a broader downturn in the NFT market, is particularly intriguing and appears to be driven by community excitement and speculation around the upcoming launch of Abstract’s mainnet, a layer-2 network developed by Igloo Inc., the parent company of both PENGU and the Pudgy Penguins NFT collection.

The main catalyst behind PENGU’s recent performance seems to be the growing anticipation surrounding the Abstract Ethereum layer-2 network launch. Abstract is set to host multiple projects, including Pudgy Penguins, and there are widespread rumors that holders of PENGU may receive an airdrop of the network’s native token during its token generation event. While these rumors remain unconfirmed, the mere possibility of such an event is enough to spark excitement and drive speculative investments in PENGU.

Abstract has officially announced that it plans to launch its mainnet in January 2025, but has yet to specify an exact date. This uncertainty means that investors are positioning themselves early, hoping to benefit from any positive developments surrounding the launch, which could potentially result in significant rewards for PENGU holders. Given that the month of January is nearing its end, the launch could happen at any time, and with the price of PENGU continuing to rise, many investors are hoping they will be in a favorable position before the event takes place.

Adding to the optimism surrounding PENGU is a sharp increase in the sales of Pudgy Penguins NFTs, the underlying collection linked to the meme coin. According to CryptoSlam data, Pudgy Penguin sales skyrocketed by almost 80% on January 23, propelling the collection to become the sixth best-performing NFT collection of the day. Additionally, daily transactions of Pudgy Penguins NFTs jumped by an impressive 100%, totaling 16 transactions, signaling a resurgence in interest in the brand.

This boost in NFT sales could be acting as a confirmation of the broader bullish sentiment within the community, with investors and collectors eager to support the Pudgy Penguins ecosystem and its native token, PENGU, in the hopes of capitalizing on the upcoming Abstract network launch. As the hype continues to build, the rally in PENGU could have further legs, especially if the NFT sales continue their upward trajectory.

Despite the positive fundamentals and strong momentum propelling PENGU’s price, technical indicators suggest that a potential price correction could be on the horizon. On the 1-day PENGU/USDT price chart, the meme coin’s price is approaching the lower Bollinger Band, which generally signals that bears are in control of the market. If selling pressure continues to build, the price of PENGU could face further losses in the short term.

In addition to the Bollinger Band reading, the Relative Strength Index (RSI) stands at 41, which indicates that momentum is currently bearish, though it is not yet at an oversold condition. This suggests that while PENGU’s price could experience further downside, it has not yet reached the point where it might be considered oversold, meaning that there is still room for some downward movement.

Furthermore, the Supertrend line, which provides insight into market trends, is currently positioned above the asset’s price, which is another bearish signal. Coupled with a negative Chaikin Money Flow (CMF) reading, which points to a lack of buying pressure, the indicators suggest that PENGU could face a pullback. Based on this analysis, the price may retrace to its local support at $0.022, and should the price fall below this level, it could move towards the psychological support level at $0.020.

However, there are also potential catalysts that could invalidate the bearish scenario and provide additional upside for PENGU holders. One such factor is the ongoing speculation that President Donald Trump could implement a policy change regarding capital gains tax on crypto profits. If such a policy is enacted, it could lead to significant upside for U.S.-based cryptocurrencies, particularly those developed by U.S.-based companies like Igloo Inc., the parent company behind both PENGU and the Pudgy Penguins project.

Should there be any official announcements or moves regarding tax reform, it could provide a much-needed boost for PENGU and similar tokens. Investors may be positioning themselves for this potential development, adding further fuel to the ongoing rally.

In conclusion, PENGU has been riding a wave of positive sentiment, driven by the anticipation of the Abstract mainnet launch, rumors of a potential airdrop, and strong Pudgy Penguins NFT sales. While these positive factors have propelled PENGU to new highs, there are also warning signs that suggest the token could face a correction in the near future. Technical indicators point to bearish momentum, and the price could retrace to support levels if selling pressure increases.

That said, ongoing speculation about potential tax reform under a pro-crypto administration, led by President Donald Trump, could provide an additional catalyst for the token, especially given Igloo Inc.’s U.S. base. As always, investors should carefully monitor developments surrounding both the Abstract mainnet launch and broader market conditions, as they will play a key role in determining the future trajectory of PENGU.

Whether PENGU will continue to rally or face a correction, it’s clear that this meme coin, driven by community hype and speculation, will be a key asset to watch in the coming days.