Synthetix's SNX token has seen a 0.81% price decline over the past hour, with the price dropping to $2.02. This comes after several days of decreasing prices, with the token down 3.15% over the past 24 hours and 3.45% over the past week. Zooming out further, the monthly and 6-month charts paint an even bleaker picture, with SNX down 26.82% and 27.05% respectively.
With a current market capitalization of $548.48 million, Synthetix is firmly within the top 100 cryptocurrencies by market cap. However, its ranking has been slipping recently along with its price. Trading volume over the past 24 hours sits at $31.24 million, suggesting reasonable liquidity.
The recent price action indicates bears have control of the market, at least in the short term. Selling pressure has accelerated this week, breaking below key support levels. Unless bulls can regain control quickly, further declines may occur before any meaningful bounce.
However, zoomed out to the weekly or monthly charts, SNX remains in an overall uptrend despite the recent weakness. The token saw tremendous gains in 2021, rallying from under $5 to over $28 by November. It has since cooled off and consolidated those gains, finding support around the $2 level multiple times this year. This could suggest current prices represent a value buying opportunity for long-term investors.
What's Behind the Recent Declines?
A few factors likely explain SNX's decreasing price over the past month. First, sentiment in the overall crypto market has weakened recently amid a volatile macro environment. Rising interest rates and talk of recession have sapped risk appetite, sending cryptocurrencies lower across the board.
As a platform for synthetic assets, Synthetix relies heavily on trading volume and speculation. When fear takes over the market, trading activity and demand for synthetics tend to dry up. This reduces overall platform usage and SNX demand.
However, Synthetix has continued rolling out new features and improvements despite the recent challenges. For example, it launched derivatives trading on Optimistic Ethereum in June. It also transitioned to Chainlink for price feeds in July, further decentralizing the protocol. Initiatives like these could start driving renewed interest.
What's the Outlook for Synthetix?
Although the macro environment poses challenges, Synthetix appears well-positioned for sustainable long-term growth. As a decentralized platform for trading synthetic assets, it offers traders unique exposures without some of the risks of holding actual cryptocurrencies. This unique value proposition should continue driving usage as the market matures.
Additionally, Synthetix is working to expand beyond just cryptocurrency derivatives into traditional asset classes like equities, indices, and commodities. Expanding the range of synths available should broaden the protocol's appeal to new users beyond just crypto traders.
The next major milestone will be the launch of Synthetix Exchange on Optimistic Ethereum. This layer 2 scaling solution will enable fast, cheap trading while leveraging Ethereum's security. As gas fees have been a significant obstacle, Optimistic Ethereum could drive far more activity on Synthetix DEX.
Here are two key predictions for SNX over the next 6-12 months:
Will Altcoins Like SNX Continue Underperforming Bitcoin in 2023?
In 2022, Bitcoin strongly outperformed most altcoins, with many smaller cap assets falling 70-80% or more from their highs. However, this divergence may not continue indefinitely.
Once the crypto market stabilizes and starts recovering, many oversold altcoins could experience strong mean reversion rallies. Traders may rotate out of relative outperformers like Bitcoin back into lagging plays like SNX.
Additionally, altcoin valuations look far more attractive after being decimated this year. SNX now trades at a fraction of its 2021 highs. If the project continues executing and expanding functionality, the token price could again reflect that progress in 2023. Don't be surprised if SNX and other altcoins regain some relative strength.
Could Synthetix Become a Top 10 Cryptocurrency?
Synthetix currently ranks around #100 with a market cap just over $500 million. However, if execution remains strong, SNX reaching a top 10 position in 2023 is not out of the question.
For reference, Avalanche and Polygon currently have market caps of $5-6 billion. Both have functioning platforms similar to Synthetix. The total potential market for synthetic assets is enormous. Even capturing a fraction of it could propel SNX's valuation much higher.
Additionally, the upcoming layer 2 migration and expansion into new asset classes should significantly expand Synthetix's addressable market. Trading volumes and fee revenues likely surge as gas fees disappear. With improved scalability and increased demand, SNX's market cap could certainly make a push towards the top 10 next year.
In summary, although Synthetix faces some near-term challenges from the bearish crypto environment, its long-term growth prospects remain intact. The project continues rolling out improvements to expand functionality and accessibility. As adoption grows, SNX has potential to outperform the broader market in 2023 and regain a spot as a top altcoin. While short-term traders should remain cautious, long-term holders could be rewarded for their patience.