One of DeFi’s hottest cryptos, Synthetix, has formed a “concerning” on-chain” sign ๐จ This article is 4 years old...
One of DeFi’s hottest cryptos, Synthetix, has formed a “concerning” on-chain” sign
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Updated: Feb. 4, 2021 at 8:07 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Joining Cardano, Dogecoin, and Chainlink, Synthetix Network Token (SNX) has been one of the top-performing cryptocurrencies over the past few months. It is one of the best-performing decentralized finance altcoins by far.
As the chart below indicates, the cryptocurrency is up by more than 250 percent since the start of June. SNX is also up by 50 percent since the start of July.
Blockchain analytics firm Santiment reports, however, that the crypto asset is forming a number of “concerning signs.”
Synthetix is printing a number of “concerning” signs
In Santiment’s Jul. 7 edition of “Bold Predictions,” the company revealed that there is a “concerning” on-chain case forming for Synthetix.
Santiment noted that its daily active addresses vs. price divergence indicator is printing its “third consecutive bearish signal.” The indicator shows the divergence between price action and SNX’s on-chain activity on the Ethereum blockchain.
The last time this indicator printed three consecutive bearish signals was in “late February, when Synthetix was well on the decline,” according to Santiment.
This historical precedent predicts the popular crypto asset may undergo a bearish reversal in the days and weeks ahead.
A sell-side liquidity crisis could change SNX’s bearish outlook
Despite this on-chain trend, Synthetix could benefit from a number of other trends.
As reported by CryptoSlate previously, one crypto analyst with the moniker “Humboldt Capital” explained that SNX may be suffering from a “sell-side liquidity crisis.”
Such a crisis is when there isn’t enough of the crypto to satisfy buying pressure. This will result in a positive feedback loop that pushes prices higher:
โSNX is about to have a sell-side liquidity crisis. I havenโt yet seen a community with holders this strong โ no one is selling. Holders already know about the upcoming product roadmap โ futures, layer 2 trading, margin โ and everyone is expecting CEX listings.โ
This was corroborated by another trader, who noted that 94 percent of the supply of SNX on Uniswap, a decentralized platform that allows users to trade cryptocurrency, has been bought up over the past three months.
Boosting the altcoin further, Binance announced support for Synthetix Network Token on Jul. 9. Binance is arguably the altcoin’s first major listing, giving many investors access to SNX for the first time ever.
Coinbase is expected to follow suit in the months ahead. The prominent crypto startup, which intends to go public via a stock listing in 2020 or 2021, announced its intent to look into supporting Synthetix Network Token in June.
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Synthetix, formerly Havven, is a cryptoasset-backed network that enables the creation of on-chain synthetic assets.
