Nexo token analysis
Author: Brandon M.
- This article discusses my thoughts on the current Technical & Fundamental state of the Nexo Token.
- The Content below is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.
- Thank you for reading my article. I hope you find it informative. And remember, this article is not financial advice.
(Nexo) Snapshot
Date: 12/02/2020
Price: $0.318
Volume: $10 Million
Circulating supply: 560 Million Nexo
Max Supply: 1 Billion Nexo
Market Cap: $178 Million
Market Overview
2020 has been a rollercoaster year for the majority of the world's markets and economies and the story for cryptocurrencies is not much different. Massive sell offs in March drove the Total Crypto Market Capitalization (TCMC) down ≈60% where it found support around the $120 billion level. In the nine months following the March market crash, the TCMC has climbed approximately 375% higher to its current price level of $569 billion. Similarly, following the march market crash the TCMC Excluding Bitcoin and the Nexo token have each rebounded substantially, climbing 390% and 313% respectively. With fear and uncertainty plaguing many investors minds during these volatile market swings, many investors have turned to earning yields on Defi and Cefi crypto lending platforms. In 2020 alone, Defi platforms have accumulated over $14.5 Billion in total locked asset value. Due to the slightly more centralised and traditional structure of platforms such as BlockFi, SALT, Nexo, etc. the financial data is a bit more difficult to obtain and for those reasons they are not included in this article.
Nexo value Proposition Going Forward
The primary value driver in regards to a utility/security token such as Nexo is the inherent utility that the token offers to the investor and the platform it services. Nexo distributes 30% of company profits back to Nexo token holders through a modified dividend distribution system. This is one example of how inherent token utility brings realized value to the investor and the platform. In an effort to increase Nexo’s underlying value, in November 2020 the company launched “Initiative Nexonomics” a series of periodic updates to the Nexo platform and token centered around increasing token utility and driving higher levels of organic demand. To date, the company has made seven total announcements pertaining to Initiative Nexonomics. Four of which have contained information regarding upgrades to platform or token utility and the remaining three have been short term promotional updates such as their latest announcement “Earn X3 In BTC” a promotional update allowing all new customers to earn 3 times the normal interest rate, paid in bitcoin, on their digital asset holdings paid in bitcoin throughout the month of December. While limited time promotions can be an adequate avenue for onboarding new customers in the short term, the long lasting effects of fundamental upgrades to Nexo’s utility is unparalleled. With that said, Nexo has returned 96% since the launch of Nexonomics.
The Technicals
Year to date Nexo has been a technical analysts dream, Nexo price has consistently risen setting higher lows and higher highs after each pull back. At the $0.10 price level I have placed a solid long term support line, looking at the historical price movement this price level has served as a difficult barrier to cross as both support and resistance. The same reasoning applies for the support line placed at the $0.25 price level. If the Nexo price were to cool off and begin to retrace it is reasonable to conclude that the $0.25 price point would provide a fair amount of resistance to the downside. With support and resistance lines placed at the $0.10 and $0.25 levels this leaves a wide range of price movement unaccounted for, due to Nexo’s dividend distribution model there has been some degree of predictability within this range as buying pressure builds up leading into a dividend distribution and then selling pressure rallies once the dividend is paid out. The 50 and 200 day moving averages appear to be especially informative within this range. As you can see from the chart, Nexo price tends to track the 200MA (blue line) closely during times of price consolidation and then deviates substantially when a cross of the two moving averages occurs. I think it is important to notice that there tends to be a larger effect on price when the 50MA crosses the 200MA to the upside (Golden Cross) as opposed to when the 50MA crosses downward. Ultimately, with the current price of $0.318 I do believe Nexo’s price is due for a small retracement in the near term. However, on a longer time horizon of 1-2 years Nexo’s technicals give the impression of being in a strong position poised for further upside movement.
Final thoughts
With the upgrades and progress that is being made to Nexo and its tokenomics in conjunction with the rapid growth observed in the crypto lending space, I personally believe it is inevitable that Nexo’s value will continue to rise. With the addition of more and more avenues to create buying pressure on the Nexo token market; the price will be forced to rise in order to meet the newly created demand. Not to mention, a large minority of buying pressure will come from the company Nexo themselves. Celsius Network is a great example of how solid execution on token utility incentives can drive the value of their own token (CEL) higher. The price of CEL has surged over 1700% year to date due in major part by the effectively designed tokenomics. In the past Nexo never quite had the right mix of utility to drive the same kind of value that Celisius was capable of. However, with its recent and ongoing upgrades I believe Nexo is now poised for growth, and that could result in a price of $1.00 by the end of 2021.
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Bitcoin: bc1qexsqcu93h6l48x5emqzv5eq4z9ctecs4dxtmlg
Nexo: 0x0B851F6Ce062117BFd938EeFf44C0883F0Fd4649
Bat: 0x769624000d5F98AfC86F78A0c127D5ba1E35eFeF
