0x had a troublesome year during 2019 as the cryptocurrency dropped by a total of 20% throughout the period. It had opened trading in 2019 at a price of $0.29 and went on to close the year at a price of around $0.18. It did experience some great moves during 2019, most notably, the 75% move from the March 2019, low $0.28 to the April 209, $0.38 high.
However, 0x was unable to make any further ground above this and went on to slowly grind lower from this moment. It eventually reached the 2019 low price of $0.15 during August 2019 and managed to rebound from here once again to climb near $0.32. However, November and December 2019 saw 0x continue to decline to close the year at a solemn price of $0.18.
Nevertheless, the team at 0x is constantly at work figuring out new ways to improve their protocol and, in turn, improving the whole decentralized space overall! With their help, the decentralized exchange industry could be taken to a new level which would help everyone, regardless of borders, to enter the trading space without having to hand over their cryptocurrency to a 3rd party centralized exchange.
The team recently released their v3 upgrade to the protocol which introduces prioritized staking for the market makers that provide liquidity across the decentralized exchanges that use the protocol. Furthermore, it also introduces a governance model as well as their new proprietory API, 0x API, which sources liquidity from many DEX’s across the board to address the lack of it.
For the reasons stated above, and more discussed below, I believe that ZRX has the potential to surge by a total of 240% in 2020 to reach my target price of $0.80 at some point during the year. The cryptocurrency has already moved by around 45% as it climbed from the 2020 low of $0.17 to reach a high of $0.25 and, if ZRX was to reach my target, the total price increase for 2020 would be a significant 350%.
In this article, I’ll firstly cover a range of topics that I believe will influence ZRX in reaching my $0.80 target during 2020 and then analyze ZRX on the daily chart to highlight some areas of resistance on the way toward the target.
What Is 0x?
0x was founded by Will Warren and Amir Bandeali and they launched their project via an ICO which went on to raise $24 million during August 2017. 0x is a protocol that allows for the decentralized exchange (or peer-to-peer transfer) of different digital assets and tokens on the Ethereum blockchain. It is pretty much a suite of smart contracts that, together, help to provide a protocol in which DEcentralized EXchanges (DEXs) can function. 0x is NOT a decentralized exchange itself and is, instead, a protocol in which decentralized exchanges can run on top of. This means that you can come and create your own DEX and attract traders to your own platform.
The team decided to release the protocol in the hopes to boost the entire decentralized exchange protocol as they felt that the industry needs to move further away from centralized services. Decentralized exchanges help to reduce the risk of hacks from outside attack vectors, reducing centralization and remove the borders involved with regulatory compliance from region to region.
Find out more about 0x and the protocol they have created, take a look at this article.
Furthermore, the best thing about 0x is that trading on 0x based decentralized exchanges is much cheaper and faster than transaction on Ethereum and, therefore, is not limited by the current low throughput that Ethereum possesses. This is due to the fact that they have a specialized system that allows for on-chain settlement with off-chain order relay.
In fact, this is what is truly unique about the 0x protocol. In other decentralized exchanges, take IDEX for example, the trades are settled on-chain and GAS is used to facilitate these transactions. This causes the cost of trading to increase, especially if a trader makes multiple trades per day as smart contracts have to be opened for each trade which requires fees in GAS and, over time, these payments can start to add up.
To find out more about the 0x settlement mechanisms take a look at this article.
Developmental Activity Recovers From Winter Holiday Lull and Daily Active Addresses Starts To Pick Up
Data from Santiment shows that Developmental Activity for the 0x project has started to pick up speed once again after the winter holiday where, typically, everybody takes a break!
Additionally, another interesting metric from Santiment is the unique daily active addresses that have also started to increase during 2020. It tailed off toward the end of 2019 but has started to gather some momentum as traders return to their normal schedule after the holidays!
Version 3.0 Takes Liquidity Sourcing To A Deeper Level
V3 of the 0x protocol was released by the team during late 2019;
This upgrade was aimed to introduce staking into the ZRX protocol as well as introducing a solution for liquidity.
The ZRX staking mechanism now grants ownership in the protocol for 0x market makers as well as encouraging them to participate in governmental decisions regarding the 0x protocol. It does this by giving them rewards in ETH as well as additional voting power (as they provide the liquidity for the platform). Furthermore, regular ZRX holders can also stake their token and receive a reward for doing so. They can also delegate their token to market maker pools to increase their chances of receiving the staked payouts.
One of the major problems that decentralized exchanges face today is the issue of liquidity. Typically, as these exchanges are new, there tend to be low levels of liquidity which makes it difficult for users to flow in and out of trades quickly due to the low participation. Some markets are liquid, such as DAI or ETH, however, other tokens are extremely illiquid such as REP. This typically leads to traders paying higher prices to place their trades which is very detrimental to profits.
0x API, the new liquidity solution from 0x, aims to solve this by creating orders that are split between all DEX networks to find the best possible price for traders. 0x v3 introduced a set of bridge smart contracts that allows the 0x protocol to connect to liquidity pools of on-chain DEX networks like Kyber, Uniswap, and MakderDAO Oasis and reporting them back to the user interface to provide the best possible prices across the entire DEX ecosystem. Additionally, to make matters easy for developers, the 0x API is a single integration endpoint that simplifies the development experience.
0x (ZRX) Price Analysis
LONG TERM - DAILY CHART
What Has Been Going On?
Analyzing the daily chart above, we can clearly see the troublesome year that 0x witnessed during 2019. Not only did it not recover much of the 2019 losses, it actually made a fresh new low that had not been seen since 2017 - the year that 0x was founded. This means that it pretty much returned back to square 1!
It had started the year by dropping until finding support at $0.21 during February 2019. We can then see that market surge during March which took it up to the $0.38 level. It traded sideways around here for a few months, however, it struggled to pass above the 200-days EMA during May/June 2019. On 4 attempts of trying to break above this resistance, the market rolled over and started to plummet from July onward.
It continued to drop until finding support in August at the $0.15 level as it returned to the 2017 trading lows. Thankfully, it rebounded from here to reach $0.34 but went on to fall again during the winter months to close at a price of around $0.18.
During 2020, 0x started the year off with a pretty 45% surge as it rises close to the $0.26 level. It is still struggling at the 200-days EMA but if the bulls kick into action they should be able to pass this without too much problem at this level.
Are We Bullish Or Bearish (as of February 2020)?
As of early February 2020, we are currently trading within a neutral condition. For this market to turn bullish, we would need to see the cryptocurrency rising and breaking above the October 2019 highs at around $0.35. If ZRX was to reverse and drop beneath the support at $0.17 the market would be considered as bearish again.
If the sellers do step in, the first level of support can be located at the 100-day EMA at around $0.23. Beneath this, support lies at $0.22, $0.20, and $0.17. If the sellers continue to drive 0x lower, additional support then lies at the 2019 lows at $0.15.
Where Is The Resistance On The Way Up TO $0.80?
On the other hand, if the buyers can break the 200-days EMA and start to push higher, the first level of resistance lies at the 2020 high at $0.26. Above this, resistance lies at $0.40 (1.272 FIb Extension), $0.42 (1.414 Fib Extension), and $0.446. The resistance at $0.446 is provided by a long term bearish Fibonacci Retracement level which is measured from the October 2018 High-day closing price to the August 2019 low. This is then followed closely with resistance at $0.467 (1.618 Fib Extension).
If the bulls continue to drive ZRX above $0.50, additional resistance is then expected at $0.537 (bearish .5 Fib Retracement), $0.60, $0.628 (bearish .618 Fib Retracement), and $0.70. Once the buyers break $0.70, they will only need to contest the resistance at $0.759 (bearish .786 Fibonacci Retracement level) before being free to make an attempt at the 2020 target of $0.80.
Conclusion
ZRX will continue to lead the way in creating a strong protocol for decentralized exchanges in 2020, and their developmental activity proves this! The team are focused on increasing the liquidity in the market and have created a function that allows its traders to source liquidity from other DEX’s across the industry! Furthermore, with additional governmental privileges for holders, and the integration of staking, users have more reason to be involved with the ZRX coin itself!
To reach the 2020 price target of $0.80, ZRX must first break above the 2020 high at $0.26 and then break above $0.35 to kick off a bullish run. Resistance above this will then be expected at $0.40, $0.44, $0.53, and $0.62. After clearing additional resistance at $0.75, the buyers will be clear to make an attempt at the 2020 price target of $0.80.
