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Stacks and dYdX Could Outperform, Pantera Capital Says — But Are They Right?

Last Updated March 7, 2024 3:23 PM
Nikola Lazic
Last Updated March 7, 2024 3:23 PM
By Nikola Lazic
Verified by Peter Henn

Key Takeaways

  • The Stacks platform offers Bitcoin smart contracts and DeFi.
  • Meanwhile, the dYdX decentralized exchange shows strong unit economics and market leadership.
  • Both projects have significant growth and innovation potential, according to Pantera Capital.

In the ever-evolving landscape of cryptocurrency, investors are perpetually on the lookout for the next big altcoin projects. Amid this quest, Pantera Capital , a crypto hedge fund, has spotlighted two altcoins—Stacks (STX) and dYdX (DYDX)—as potential frontrunners in the upcoming bull market. 

Are Pantera Capital’s predictions for Stacks and dYdX’s outperformance a foreseeable reality, or merely speculative optimism? Let’s look into the details of Pantera’s analysis, exploring the merits and potential pitfalls of betting on these altcoins.

Bitcoin Programability With Stacks 

In their recent Blockchain Letter, analysts from Pantera Capital, have spotlighted two altcoin projects they believe are promising for the upcoming bull run. Analysts Cosmo Jiang and Erik Lowe emphasize their focus on crypto projects that demonstrate strong fundamental growth, including those with product-market fit, effective management teams, and sustainable economic models.

STX investment thesis

The first project they highlight is Stacks (STX), aimed at enhancing Bitcoin’s scalability and introducing smart contract functions. They note Stacks’ unique position as the only operational, generalized smart contract layer-2 solution for Bitcoin (BTC), giving it a significant advantage over potential future competitors due to its first-mover status.

The key to DeFi success on Bitcoin lies beyond technical capabilities. It requires economic integration with Bitcoin’s value, the ability to innovate without changing Bitcoin’s base layer, a modular design for adaptability, trustless asset bridging between chains, and a focused effort on engaging both current Bitcoin users and future developers. 

This approach aims to align with Bitcoin’s economic and security principles. As a result, this should ensure the system is accessible, secure, and capable of evolving without fundamental changes to Bitcoin’s core.

STX Price Analysis 

STX reached its previous all-time high of $3.40 on February 28, coming from a low of $1.35 on January 23. It increased by over 150% and has shown some signs of weakness but is still in an uptrend overall. 

daily chart
STX is overextended

We’ve most likely seen the completion of this uptrend. This, in turn, is the continuation of a larger uptrend dating from September last year when STX reached a higher low of $0.50.

Now, as it revisits its all-time high, a correction for wave four to develop shouls start. Furthermore, the daily chart RSI entered the overbought zone above 70% on February 24. 

As the correction unfolds, another higher high would be expected for its fifth to complete the pattern. If we project the target at the 1.618 Fibonacci extension, we come up with a price point of around $5. 

Revenue-Generating Protocol dYdX

The second project on their radar is dYdX (DYDX), an Ethereum-based decentralized exchange (DEX). Pantera’s interest in dYdX stems from its positive unit economics over the past year, characterized by a simple business model of collecting commission fees while maintaining a healthy profit margin. Additionally, a recent shift towards rewarding token holders with staking rewards has made the token’s value proposition more tangible to investors.

dYdX investment thesis

The platform’s profitability, driven by commission fees and efficient capital allocation, offers token holders direct profit distribution through staking rewards. Its attractive valuation and potential for significant growth, supported by a strong business model and expanding market presence, position dYdX as a compelling investment with the prospect of substantial returns and increased protocol value over the next year.

DYDX Price Analysis 

Unlike STX, the price of DYDX is still in its accumulation zone after finishing the previous bear cycle. It found support around $1 in the second half of 2022 and started forming a slightly rising channel to a high of $4.30 in November last year. 

daily chart
DYDX is still in accumulation.

This rising channel could be a leading diagonal with a five-wave impulse. Now, with the price in an upward trajectory, we could see it end. If the price breaks into the upside, it will signal the new bull phase, and a more significant uptrend to $14 is likely. 

However, if it gets rejected, it could make another drop to $2.20 before the uptrend starts. In addition, we can see a typical cup and handle pattern forming on the daily chart. This usually indicates that the U-shaped bottom is being established before the price embarks on a lasting uptrend. 

Conclusion 

These insights from Pantera Capital show the potential of Stacks and dYdX as leading projects in their respective areas.

Pantera Capital suggests Stacks and dYdX could outperform due to their use cases and strong market positions. By enabling smart contracts and DeFi on Bitcoin, Stacks leverages Bitcoin’s security and capital base. Not only that, but there is also potential growth from its Nakamoto upgrade. 

dYdX, leading in decentralized perpetual futures trading, benefits a growing market for decentralized exchanges, after the FTX collapse. Both are at the forefront of significant trends in the crypto space. Therefore, they could well have the potential for growth.

 

Disclaimers

Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.

 

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