Synthetix (SNX) prices hit a one-month high on Monday as traders looked for alternative upside bets against a mixed cryptocurrency market.
SNX / USD bids hit an intraday high of $ 13.76 during the Asia Pacific trading session after starting a price rally of around 25% on Sunday. A variety of technical and fundamental factors contributed to the sudden market demand for Synthetix tokens, including founder Kain Warwick’s update on the project’s highly anticipated Layer 2 solutions.
A new synthetic exchange in progress
Layer 2 refers to the techniques for scaling blockchains by taking compute and transaction load off the higher-level layer and placing it on a base layer. Synthetix, an Ethereum-based synthetic assets platform, has been testing such scalability solutions since October 2020 to limit its reliance on Ethereum’s model for higher gas and transaction fees.
Last Saturday, more than 12 hours before the SNX / USD rate began to rise, Warwick announced that Synthetix would launch a Layer 2 exchange (or Synths) trading platform in the week beginning July 26th.
“The first synths supported will be sETH, sBTC and sLINK. In addition, the price feed for SNX will also be provided by Chainlink,” said Warwick.
Optimistic Ethereum, formerly known as Plasma Group, proposes scaling the Ethereum blockchain through a unique mechanism called rollup. Rollups are Ethereum-based smart contracts that receive transaction data from the main layer of the blockchain and send it to L2 where the calculations take place. It then receives the calculation result from the L2.
So far, the Optimism team has shown that it could handle more transactions with lower fees than Ethereum. Meanwhile, Synthetix decided to become one of the early adopters of Optimism in the expectation that it would inspire other decentralized finance projects to adopt him as well.
“If other major DeFi protocols can adopt optimism, all transactions between them can remain on L2,” wrote Will Comyns, a researcher at Messari, in his June 23 report.
“This means that users don’t have to wait a full week for their funds to be reintegrated into the main Ethereum chain before they can interact with another protocol.”
So far, the “bullish” fundamentals have proven to be beneficial in raising Synthetix prices. This is in part because SNX is used as a token of security for the creation of Synth. In return, stakers receive additional SNX on top of their stake through Synthetix’s “inflationary offer” model. You also receive a fixed amount of fees in SNX for trading the Synth.
Synthetix’s latest 25% pump has moved its 20-day exponential moving average (20-day EMA; the green wave) above its 50-day simple moving average (50-day SMA; the blue wave). As a result, the golden cross 20-50 MA was instrumental in predicting the price rally from November 2020 to March 2021.
Nonetheless, the SNX / USD remains at the crossroads with the resistance area of $ 13.85 to $ 14.80, a range that has historically capped the pair’s upside attempts and held as support during its correction period between February and May 2021 has been. Closing above the resistance area would have the bulls testing the following Fibonacci range from $ 16.37 to $ 17.69.
Conversely, a strong pullback of $ 13.85 to $ 14.80 would likely propel SNX / USD towards the range of $ 11.92 to $ 10.74. Such a move would also risk invalidating the 20-50 golden cross setup.
VORTECS ™ data trended bullish ahead of the SNX rally
Meanwhile, Cointelegraph Markets Pro’s VORTECS ™ data began rising 24 hours before Sunday’s rally, identifying a bullish outlook for SNX ahead of the recent price hike.
The VORTECS ™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points, including market sentiment, trading volume, recent price movements and Twitter activity.
As can be seen in the graph above, the VORTECS ™ Score flashed green at midnight on Sunday at a peak of 79 – an increase of only 47 in 24 hours – and the price continued to climb to $ 13.88 thereafter.
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