Well, we are verging on closing the month of March 2020 and it has been a very tough period for markets across the board and probably one of Bitcoin’s worst-ever months in history! I am sure many of you will be happy to see the month close!
I would like to say the future is bright for Bitcoin, however, we are still pretty much in ‘no man’s land’ and the market could be headed in either direction for April 2020. It all depends on how quickly the world can recover from the Coronavirus pandemic because if the situation gets worse, we could be seeing some further drastic drops within the market.
On the flip side, the economic recession could actually help Bitcoin and we will finally get to see if it really holds up to the statement that ‘Bitcoin is a store of value’.
Nevertheless, today I would like to provide a 2020 price prediction for an exciting DeFi project known as Synthetix Network token.
Firstly, let us take a look at the performance of Synthetix Network Token (SNX) below from January 2019 until today;
Looking at the chart above we can see that SNX performed extraordinarily well during 2019. In fact, from low to high, it managed to increase by a whopping 4,300%! Now, that is some crazy growth!
SNX has since fallen from the highs but has managed to find some strong support at the $0.40 level during the recent market capitulation, this is a good sign because it has not even come close to wiping out all of the gains made in 2019.
The project is in a very strong position today. The team continues to make updates to the platform and the protocol and we have some very exciting features to look forward to in 2020. The most important thing to remember about this type of DeFi protocol is the fact that, regardless of what is going on inside the crypto network, there will always be a need for Decentralized Finance.
Synthetix Network is the definition of DeFi as it allows users to create derivatives of different asset classes in a synthetic tokenized form (more on this below). So, when the economy is moving up or down, there will always be a use case for the Synthetix Network.
For the reasons stated above, and more discussed below, I believe that SNX has the potential to surge by a total of 350% from the current trading price ($0.55) to reach my 2020 price prediction of $2.50. In all honesty, I believe it could travel much further higher than this, however, in such difficult times, it is difficult to provide a very accurate prediction beyond this.
In this article, I’ll firstly cover a range of topics that I believe will influence SNX in reaching my $2.50 target during 2020 and then analyze SNX on the daily chart to highlight some areas of resistance on the way toward the target.
What Is Synthetix Network (SNX)?
Synthetix Network is one of the hottest Decentralized Finance (DeFi) projects within the industry right now. In fact, according to defipulse.com, it is actually ranked in the 3rd position in terms of USD locked within its ecosystem which is a measure of how much it is being used;
The Synthetix Network looks pretty complicated, however, after defining it, I will attempt to make this explanation of what it is very simple.
Synthetix Network is a DeFi protocol that allows users to issue synthetic assets that actively track the price of the underlying asset.
In a nutshell, it allows users to come and ‘create’ (issue/mint) derivatives of other assets such as FX currency, cryptocurrency, commodities, and stocks. Once these synthetic assets are minted, users can easily trade these assets in the hope to make profits from the price increase (or decrease).
Built on Ethereum, the protocol is designed in a way that requires a large amount of collateral for the synthetic assets (called Synths) to be issued. The collateral required in this protocol is the SNX token itself and this is locked up within the protocol’s smart contracts if a synthetic asset is to be minted. Furthermore, users have to over-collateralize their Synths to the tune of 750% for them to be created.
For example, let us say that you wanted to mint $100 worth of sUSD (a Synth that tracks the value of the USD - basically a stablecoin), you would need to lock up $750 worth of SNX within the Synthetix Network smart contract for this to be possible.
The Synths can literally be any type of financial asset that has a fair price that can be tracked. Currently, you can create Synths for the following;
- Currencies - AUD (sUSD), CHF (sCHF), EUR (sEUR), GBP (sGBP), JPY (sJPY), USD (sUSD).
- Cryptocurrencies - BNB (sBNB), BTC (sBTC), ETH (sETH), LINK (sLINK), LTC (sLTC), MKR (sMKR), TRX (sTRX), XRP (sXRP), XTZ (sXTZ).
- Commodities - Gold (sXAU), Silver (sXAG).
- Indexes - Centralized Exchange Index - tracks the price of exchange coins BNB, LEO, Huobi Token, OKB, and KuCoin Shares (sCEX), and DeFi Index - tracks DeFi projects LINK, MKR, 0x, SNX, REN, LRC, KNC, BNT, MLN (sDEFI).
You can also buy the ‘inverse’ of some of these Synths that are inversely correlated to the price. This means if the price goes down, you make money.
What Is The Idea Behind All Of These Synths?
Well, we need to remember that not everybody can actually gain access to the majority of these assets without opening up a brokerage account (or cryptocurrency exchange account). Instead, tokenization of these assets is pretty much just as good as holding the assets themselves. In some cases, tokenized assets are better because it does not even require investors to hold and store the asset. It becomes costly when you are trying to keep Gold bars safe or storing oil barrels in a warehouse. The Synthetix Network allows a frictionless method of holding and investing in these assets for the entire Ethereum ecosystem. All you need to get started is just an Ethereum wallet and a web-browser.
Do you think the price of Gold is going up? Well go ahead and buy some sXAU and hold that Synth. Do you think that Binance Coin is going down? Buy some iBNB ( the ‘i’ means that it is the inverse) and hold that Synth as BNB drops to make money.
What To Look Forward To In 2020?
There are lots of things to look forward to in 2020 for Synthetix Token Network especially as the entire DeFi space continues to grow at alarming rates.
One of the most exciting things will come from the team marketing their exchange that almost acts as the backbone for Synthetix Token, called Synthetix.Exchange (sX). So far, the team has not conducted much marketing to drive users to the exchange due to the fact that they were focused on improving sX itself. Furthermore, if new traders started to have a bad experience it is likely that they would not return in the future.
Nevertheless, the team feels like sX is now in a position in which new traders will be excited to use it and have plans to increase the user base throughout 2020.
Following are some additions to sX that we can expect in 2020;
- Traditional asset classes such as equities, ETFs, and Indices in Q2 2020.
- New crypto Synths in Q1 2020 - after the asset listing framework is complete.
- Leveraged Synths in Q2 2020 - Initially they will start with leveraged fiat Synths and then move on to 5x and 10x leverage for BTC and other crypto assets
- Binary Options in Q3 2020 - Providing additional trading instruments for hedging after Chainlink Oracle is fully implemented
- Advanced Order Types in Q2 2020 - This will introduce order types such as limit, stop loss, and stop limits into the trading engine which will improve the trading experience.
- Sx interface improvements in Q1 2020 - Will bring improvements to the markets and the assets page to make navigation simpler.
- Synthetic Futures in Q3 2020 - Will allow traders to open leveraged long or short positions on supported Synths. This is expected to bring the vast majority of volume to the platform.
- ETH, DAI, and BTC collateral in Q2 2020 - use these currencies as collateral for Synths.
- Mobile Interfaces in Q2 2020 -
As you can see, the team certainly does have a lot of features that will come to the exchange that will greatly improve the user experience and allow traders to stay on-board with all the features they would need to trade.
At the end of 2020, it is likely that sX will be competing with all of the top-ranked cryptocurrency exchanges and DEX’s within the industry.
Synthetix Network (SNX) Price Analysis
LONG TERM - DAILY CHART
What Has Been Going On?
Taking a look at the chart above, we can see that for the first half of 2019 SNX was pretty damn quiet! It did start to lift off slightly in May as the cryptocurrency increased to the $0.37 level, however, the true growth came during October which saw SNX explode from $0.37 to reach as high as $1.50. The resistance here was provided by a 1.618 Fib Extension level.
This would be the ATH price for the cryptocurrency as it rolled over from here to drop into the 200-days EMA at around $0.80 during the first week of January 2020.
After rebounding from $0.80, the cryptocurrency then went on to increase toward the $1.25 level. However, this is when SNX started to show signs of weakness as it started to drop lower again. During March 2019, we can see that it dropped as low $0.37 again during the Coronavirus pandemic market collapse. The support here was provided by a long term .786 Fibonacci Retracement level.
SNX has since rebounded from here but has now run into resistance at the bearish .236 Fibonacci Retracement level priced at $0.60. This Fibonacci Retracement level is measured from the 2019 high price to the March 2020 low.
Are We Bullish Or Bearish (as of late March 2020)?
As of late March 2020, we are pretty much bearish. The cryptocurrency would need to rise above $0.80 (200-days EMA) before we can consider a neutral trading condition and would need to continue higher above $1.00 before we can even start to think of a bullish market condition.
If the sellers do step back in and push lower, the first level of support is located at $0.50. This is followed by support at $0.40, $0.36 (long term .786 Fib Retracement), $0.35, $0.30, and $0.27 (downside 1.414 Fib Extension level).
If the sellers continue to drive the price of SNX lower, added support is expected at $0.21 (long term .886 Fibonacci Retracement level), $0.15, $0.136 (downside 1.618 Fib Extension), and $0.10.
I doubt the price would really get as low as $0.1 but we should be prepared for it to hit $0.21 if we do close beneath $0.36.
Where Is The Resistance On The Way Up TO $2.50?
On the other hand, once the buyers can push SNX above $0.60, the first levels of resistance above lie at $0.70, $0.77 (bearish .382 Fib Retracement), and $0.80 (200-days EMA). Above this, higher resistance lies at $0.91 (bearish .5 Fib Retracement), $1.00, and $1.05 (bearish .618 Fib retracement).
Once $1.05 is cleared, the bullish momentum should be clearly on the table. If they continue to drive higher, resistance then is expected at $1.25 (bearish .786 Fib Retracement), $1.37 (bearish .886 Fib Retracement), and $1.50 (previous ATH).
If the buyers can then start to create fresh ATH’s we can expect resistance at $1.70, $1.78 (1.272 Fib Extension level - black), $1.90 (1.414 Fib Extension level - black), and $2.00. Above $2.00, resistance lies at $2.06 (1.618 Fib Extension - black), $2.20 (long term 1.414 Fib Extension - blue), $2.40 (1.618 Fib Extension - pink), and then at my 2020 target of $2.50 (long term 1.618 Fib Extension - blue)
Synthetix Network is already the 3rd ranked DeFi project out there, however, it is capable of so much more. Once people start to realize the power of DeFi, the cornerstone projects that revolve around DeFi (such as Maker, Compound, and Synthetix Network) will truly explode. Everybody will always need forms of decentralized finance regardless of the market trading conditions.
As the team proceeds to make enhancements to their protocol and to their sX exchange, we can expect the user base for SNX to continue to grow exponentially. This will certainly help SNX reaching my 2020 price target and it is likely to continue much higher from there.