SNX, the native token of Ethereum-based decentralized perpetual futures protocol Synthetix, has emerged as the top-performing altcoin despite today’s widespread market downturn. Prices have risen 24% in the past 24 hours on renewed demand.
The surge follows the launch of Synthetix’s new perpetual exchange on Ethereum and heightened expectations for the trading competition scheduled for October 20th. However, on-chain and technical indicators suggest that this momentum may not be sustainable in the short term.
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SNX momentum builds heading into $1 million contest, but bearish bets signal caution
Ahead of the launch of the first perpetual DEX on Ethereum mainnet, scheduled for later this quarter, Synthetix announced that it will hold a well-timed trading contest on October 20th, with a $1 million prize awarded to the top winners.
Fueled by hype about upcoming events and the protocol’s impending exchange launch, trading activity for Synthetix’s native token, SNX, has skyrocketed, sending its price soaring. The altcoin, trading at $2.11 at the time of writing, has risen 22% since Sunday.
However, on-chain and technical indicators suggest that this momentum may not last.
According to data from Coinglass, SNX’s long/short ratio has remained flat at less than 1 since September 22nd, indicating a bearish position despite the sharp rise in price.
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The long/short ratio compares the number of traders holding long positions to the number of traders holding short positions. As seen on SNX, a number below 1 reflects bearish expectations in the market.
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Its persistent sidewaysness suggests that there is no bullish change in sentiment even as SNX price rises and most traders are still betting on the token. This suggests the possibility of a pullback in the short term.
Meanwhile, the Relative Strength Index (RSI) shows that SNX has entered overbought territory, indicating that the token may be in a period of cooldown. As of this writing, the key momentum indicator sits at 72.62.
The RSI indicator measures overbought and oversold market conditions for an asset. Values range from 0 to 100. Values above 70 indicate that the asset is overbought and there is a period of price decline. On the other hand, a value below 30 indicates that the asset is oversold and could bounce back.
SNX’s current RSI reading indicates that the altcoin is overextended and could face a short-term correction.
$2.58 breakout or $1.77 retest?
If momentum stalls and traders start taking profits, SNX could regain some of the gains in coming sessions. In that scenario, the price could fall towards $1.778.
Conversely, if renewed buying pressure persists as a trading war approaches, the token could consolidate at higher levels. The price could break through the resistance level at $2.131 and charge toward $2.580.
