For cryptocurrency enthusiasts and investors, the price of Synthetix has been one of the most closely watched assets. The recent rebound in its value has been a welcome reprieve for many, with worries about future volatility in Bitcoin prices pushing some to seek more stable alternatives. This article looks at some of the reasons why we might think that this increase is sustainable, and what it means for the currency. The world of crypto can get pretty convoluted – especially when you’re trying to follow multiple currencies simultaneously – so it’s really important that you only invest what you can afford to lose. If you don’t understand technical analysis, this is a good time to start learning how it works.
What’s driving the Synthetix price up?
The increase in the value of SNT has been driven by several factors. The first and most obvious is that Synthetix has managed to recover from an early dip in value during the Christmas period, with prices dropping as low as $0.5 per coin on 11th January before going into freefall from which they would not recover for several days. This kind of drop isn’t uncommon in crypto – if anything, it’s become increasingly common over the last couple of months – but it was still worrying for many investors who had invested at much higher values than this. However, it’s also worth noting that this recovery is being driven by the wider crypto market as a whole. Bitcoin has been stronger than it has been for several weeks, with the market cap for BTC reaching its highest level since December 2016. It seems likely that some of the value is spilling over into other coins too – after all, cryptocurrency doesn’t take place in a vacuum, and there are strong historical links between the different currencies.
Synthetix outlook: Solving Defi liquidity and slippage issues
Next, it’s worth looking at the features of Synthetix that make the token more attractive to investors and traders. As a protocol coin, its real value is in the way that it can be used to create other tokens – known as Defi in crypto – and this is an area where SNT could challenge Ethereum. Technical analysis enthusiasts will have heard of slippage before. This refers to the difference between the price of a currency about another, more stable asset – usually dollars or euros. In trading terms, slippage can lead to profits being missed or foregone entirely, which is why technical analysts tend to avoid trading with extremely volatile currencies when possible. This can happen in any market, but it’s especially important to watch out for when trading SNT.
What is the SNX token?
One of the “unique” aspects of Synthetix is that it’s a protocol token. What this means is that the token itself can’t be traded on exchanges – only the tokens created using it. This has important implications for liquidity, which is why crypto traders think so highly of SNT. It essentially means that when traders want to buy SNT, they have to first buy Ethereum, and then buy a bundle of other NFTs – known as a Synthetix Defi “contract” – which consists of several different assets. These aren’t always available to buy, but they are generally easier to acquire than other kinds of digital assets. This is because they are run on Ethereum, which uses a smart contract to keep them secure – as long as the contract is well-built, it’s not going anywhere. This keeps the assets safe from theft and unsafe ownership transfers.
Synthetix ease of use: The pros and cons of building on the Ethereum blockchain
Finally, let’s look at Synthetix’s development and how this will affect its price moving forward. While buying other crypto tokens can be complicated due to their unique nature, Synthetix should be pretty straightforward for people with experience in trading other protocol coins like BTC and ETH. However, there are still some risks associated with SNT – especially with Ethereum itself.
