Synthetix Reaches New Yearly High Due to a Proposal to End Token Inflation
Synthetix has reached a new high, but what does the future hold?
Key Takeaways
- SNX token inflation has become obsolete.
- The price has spiked by 6% on the news but is in a larger uptrend.
- However, chart analysis points out the short-term pullback.
The Synthetix network’s governance has approved a proposal known as SIP-2043, signaling a significant shift away from token inflation in the Synthetix (SNX) ecosystem. This step moves towards a new strategy for the decentralized derivatives platform, incorporating token buybacks and burns instead of minting new tokens.
The community backing for SIP-2043 demonstrates a consensus to halt inflation, indicative of the protocol’s evolution and its pivot to long-term, sustainable growth tactics. This transition will kick off with the Andromeda update, introducing token buybacks and burns as new economic levers.
This change also means that Synthetix stakers will no longer collect weekly inflation rewards, a decision that aligns with the protocol’s changing requirements and community expectations. Following the news, the price of the Synthetix token (SNX) surged, hitting an annual peak of $5 and currently trading around $4.67. Was this the highest point this year?
SNX Price Analysis
The price of SNX has risen since October 19, when a low of $1.83 was made. This low was a higher one compared to June’s, and the price now made a new yearly high above July’s and April’s.
These higher lows and higher highs mean the price has started a larger uptrend after consolidating between $1.50 and $3.30 from the start of the year. As it made a breakout above $3.40 on November 20, it continued moving to nearly $5, which is near the high from July 29, 2022.
So is the rise over, or does it have more room to go?
Looking at the daily chart above, we can see that the price is getting overextended. This is indicated both by the Fibonacci levels and the RSI indicator. We saw a parabolic rise to the 1.272 Fibonacci level measured from the previous low to the previous high on the log chart. As the advancement gets bitter, so could the correction get deeper.
The RSI started to touch the overbought zone at 77% on October 25 and has been hovering sideway since, showing divergence with the ascending price. From this, we can assume that the rise is unsustainable and could stop soon.
However, the most likely scenario is for the price to return to the $3.30 zone as a retest for support and then continue moving upward if the support is present.
Disclaimer
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.
