KAITO token plunges below key support as Kaito shutters Yaps program under new X rules
KAITO’s native token suffered a sharp sell-off after the project’s team moved to shut down its flagship Yaps incentive program in response to new policy restrictions on X, pushing the price below a crucial descending trendline and signaling the risk of further downside.
On Friday, KAITO fell as much as 24% intraday after the announcement, extending a steep drop that began almost immediately once the news hit social platforms. Within the first hour, the token slid nearly 21%, before stabilizing around the $0.54 region at press time — roughly 24% below its level prior to the update.
The catalyst was a Jan. 15 post from Yu Hu, founder of the crypto analytics platform Kaito. Hu confirmed that the project would discontinue both its Yaps product and the associated incentivized leaderboards in order to remain compliant with new rules introduced by X. The platform recently rolled out a ban on applications that pay or otherwise reward users for posting content.
Hu explained that, following conversations with X, it had become clear that a “fully permissionless distribution system” was no longer compatible with the direction of the platform or with the needs of brands and serious creators. In other words, an open, reward-based posting model — where anyone could join and earn regardless of content quality — no longer aligned with X’s policy framework or brand safety priorities.
The shift in policy was publicly articulated by Nikita Bier, X’s head of product, who said the company had moved to explicitly prohibit apps that incentivize user posting. According to Bier, the previous allowance for such models had led to a spike in low-quality, AI-generated spam and so-called “reply slop,” cluttering feeds and undermining user experience. The clampdown is aimed at curbing this type of behavior across the platform’s ecosystem.
These changes directly impact Information Finance (InfoFi) platforms such as Kaito, which had built growth strategies around gamifying engagement via X’s API. Under the Yaps system, users were encouraged to post about specific brands or crypto projects, in return for earning Yap points and KAITO tokens. Rewards were distributed based on user activity and social interactions, effectively turning attention and posting volume into financial incentives.
Over time, however, this model attracted increasing volumes of automated accounts and AI-generated content. While the program initially drove awareness for partner brands and boosted Kaito’s footprint, the open incentives also created fertile ground for spammy engagement and low-effort promotional posts. As participation surged, the balance shifted from organic advocacy to mechanized content farming — exactly the kind of behavior X’s updated policies now target.
On-chain analysts noted that the policy change had sweeping consequences for Kaito’s user base. The enforcement reportedly affected roughly 157,000 participants in the Yaps ecosystem who were caught up in X’s crackdown following the new rules. For many, this instantly halted their ability to use X as an earning channel tied to KAITO rewards, weakening one of the project’s most high-profile growth levers.
In response, Kaito is retiring Yaps and rolling out a new product, Kaito Studio, positioned as a more curated and selective marketing suite. Unlike the permissionless Yaps model, Kaito Studio will operate with a tiered structure and tighter onboarding, focusing on vetted creators and more controlled campaigns. The project also aims to diversify beyond X by expanding into additional social platforms such as YouTube and TikTok, reducing reliance on a single API or policy environment.
From a price action perspective, the timing of the Yaps shutdown intersected with an already fragile technical setup for KAITO. On the 4-hour chart, the token has now broken below a key descending trendline that had functioned as critical support since late December. This trendline had repeatedly offered a floor during prior pullbacks, so the latest breakdown is being interpreted by traders as a decisive bearish signal.
Technical indicators corroborate the negative sentiment. The Moving Average Convergence Divergence (MACD) lines recently confirmed a bearish crossover and are pointing sharply downward, reflecting growing sell-side momentum. At the same time, the Chaikin Money Flow (CMF) index, which tracks capital inflows and outflows, has flipped into negative territory, suggesting net capital is leaving the asset rather than entering.
Taken together, the loss of trendline support, the bearish MACD structure, and negative CMF readings reinforce the view that KAITO may see additional weakness in the short term. Market participants are now eyeing the December low near $0.47 as the next significant downside target. A retreat to that level would test whether buyers are willing to step back in and defend prior support, or whether the market will accept a deeper repricing of the token in light of the changing business model.
That said, the technical picture is not entirely one-sided. If KAITO can muster a rebound and reclaim the psychologically important $0.60 level, it would signal that dip buyers are starting to gain traction. A sustained move back above that area could invalidate the immediate downtrend, potentially opening the door for a consolidation phase or even a gradual recovery, especially if the rollout of Kaito Studio restores some investor confidence.
The current episode also highlights a broader structural risk within crypto marketing and InfoFi platforms: dependence on centralized social networks. Kaito’s Yaps program was deeply intertwined with X’s infrastructure and policies, giving the project rapid distribution but also exposing it to abrupt rule changes. Once X shifted its stance on incentivized posting, Kaito’s core engagement engine became untenable almost overnight, forcing an urgent pivot and spooking token holders.
This underscores why many newer projects are now rethinking purely volume-based engagement incentives. Reward structures that pay users simply for posting or replying, without sufficient quality filters, tend to encourage recycled talking points, low-effort AI content, and automated spam. While this may create the illusion of growth in metrics such as impressions or mentions, it often fails to build genuine brand equity, and can backfire when platforms adjust algorithms or enforcement.
Kaito Studio’s more selective, tier-based approach fits into a growing industry trend toward curated creator networks and performance-driven campaigns. Rather than opening the floodgates to anyone willing to shill for a reward, projects aim to collaborate with creators who can produce higher-quality, platform-native content that resonates with audiences. For Kaito, success will likely depend on whether it can shift from mass, incentive-driven amplification to curated influence that feels authentic and sustainable.
From an investor perspective, KAITO’s price shock reflects both immediate selling pressure and a revaluation of future growth prospects. Yaps was central to Kaito’s narrative as an InfoFi player leveraging social incentives; its removal introduces uncertainty about user growth, data acquisition, and brand demand. Some holders may view the pivot as a necessary clean-up that improves long-term viability, while others may interpret it as a loss of a key differentiator, at least until Kaito Studio proves its traction.
Another layer to watch is regulatory and reputational risk around AI-generated content and spam. As more platforms tighten rules on automated engagement, crypto projects that rely on aggressive incentivization may face increasing friction. Kaito’s willingness to align with X’s policy changes, even at significant short-term cost, could be seen as an attempt to position the project as a compliant, brand-safe partner rather than a growth-at-all-costs marketing engine.
For traders, the near-term playbook revolves around a few key levels and signals. On the downside, the December low around $0.47 is the primary support. A clear breakdown below that zone on strong volume could open space toward even lower price discovery, especially if negative funding rates or heightened short interest emerge. On the upside, reclaiming $0.60 and then converting it into support would be the first sign that sellers are losing control; confirmation would likely require improving momentum indicators and a recovery in CMF toward neutral or positive values.
Medium term, sentiment around KAITO may hinge on visible progress and case studies from Kaito Studio. Demonstrated adoption by recognizable brands, proof of effective campaigns across multiple platforms, and evidence of healthier, human-driven engagement could help rebuild confidence that the token still has a meaningful role in the project’s ecosystem. Absent such signals, the market may continue to discount KAITO’s valuation relative to its earlier growth story anchored in Yaps.
Ultimately, the KAITO sell-off encapsulates a key tension at the intersection of crypto, AI, and social media: how to harness incentives and automation without eroding content quality or triggering platform-level backlash. Kaito’s abrupt transition away from a permissionless rewards scheme and toward a curated studio model will serve as an important test case for whether InfoFi platforms can evolve beyond spam-prone engagement mining and still deliver value to both users and token holders.