The price of the KAITO token declined by 24% on Friday following the announcement from the Kaito development team regarding the termination of their Yaps initiative. It has fallen beneath a critical falling trendline, rendering it susceptible to further losses in the future.

On January 15, Yu Hu, founder of the crypto analytics platform Kaito, said via an X post that the project will discontinue its Yaps product and incentivized leaderboards to adhere to policy changes at X, which has recently instituted a prohibition on programs that compensate users for content creation.

Hu remarked, “Following discussions with X, it has been determined that a completely permissionless distribution system is no longer feasible or compatible with the requirements of reputable brands, dedicated content creators, or X as a platform.”

KAITO price breaks key downtrend line

The KAITO token declined roughly 21% during the initial hour and eventually stabilized at approximately $0.54 at the time of reporting, reflecting a decrease of about 24% since the announcement.

Hu made her remark soon after Nikita Bier, head of product at X, announced that the firm has changed its rules to forbid apps that reward users for sharing. This resolution resulted from an increase in AI-generated spam and reply slop, according to Bier.

Information Finance (InfoFi) businesses like Kaito, which used X's API to gamify user participation and disburse cryptocurrency rewards based on social interactions, were specifically targeted by the regulation change.

ZachXBT, a cryptocurrency expert, pointed out that the regulation change had an impact on about 157k Kaito Yapper community members who were blacklisted after the crackdown.

For those who don't know, Yaps was a Kaito tool where users could earn KAITO tokens and Yap points by tweeting about projects or businesses. But as more people joined the ecosystem, automated spam and AI-generated content increased significantly.

After Yaps sunsets, Kaito will replace it with Kaito Studio, a tier-based marketing platform that is more discriminating and will reach other social media platforms like YouTube and TikTok.

ZachXBT, a cryptocurrency expert, pointed out that the regulation change had an impact on about 157k Kaito Yapper community members who were blacklisted after the crackdown.

KAITO price analysis

Since late December of last year, KAITO has lost a significant declining trendline that served as a crucial support level on the 4-hour chart. A decline below this trendline indicates that the price may be subject to short-term bearish momentum.

The bearish bias also appears to be supported by technical indicators like the MACD and Chaikin Money Flow index.

A bearish crossover was just verified by the MACD lines, which were sharply heading downward, indicating an increase in sell-side pressure. Additionally, the Chaikin Money Flow index, which displays the net flow of funds into or out of the asset, produced a negative result.

Therefore, before bulls try any possible rebound, KAITO is probably going to keep falling into its December low of $0.47.

However, the KAITO price may be able to reverse its current downward trend if it is able to recover and return above the psychological mark of $0.60.