How a Spike in Sentiment Predicted the 100% Rally in Synthetix ($SNX)
Synthetix ($SNX), the decentralized platform for minting and trading synthetic assets, shot up to more than double in price during the week of June 19th, 2022.
Reasons for the Rally
The price jump appears to have been the result of a surge in the platform's trading volume and associated trading fees with the possibility of a short squeeze in $SNX contributing as well.
The upswing in trading volume was likely related to the success of the atomic swap function that Synthetix released in November 2021 and further improved this past May with the SIP-198. This function helps users execute large-scale trades between different asset classes such as trades between wBTC and ETH - with minimal slippage.
Since the upgrade to this function in May, atomic swaps have experienced growing adoption as they now account for the majority of volume seen on Curve, 1inch, and other aggregators. This growth in volume hit a crescendo on Sunday June 19th, 2022 with daily volume peaking at $396M.
However, by June 17th, 2022, Synthetix had already become the most used contract among the top 100 ETH whales and had seen daily volume at $100M for consecutive days, but the $SNX price didn't start its breakout until days later on June 19th, 2022.
The Crowdsense Edge
That being said, Crowdsense users had the advantage of knowing that Synthetix social media sentiment had spiked before the price started to move higher.
The Synthetix Daily Sentiment Graph from Crowdsense, as seen below, reveals that:
On 18/06/2022 at 19:46 GMT+3, sentiment was at 5.3/10 with $SNX trading at $1.5933
By 19/06/22 at 9:01am GMT+3, just 13 hours and 15 minutes later, sentiment had peaked at 6.5/10 with $SNX trading at $1.5243
The first yellow arrow highlights the first jump in sentiment from 5.3 to 6.5 on a scale to 10, a 22.6% spike with the $SNX price essentially moving sideways.
And by 20/06/2022 at 9:22am GMT+3, 1 day and 21 minutes later, $SNX was trading at $3.182
Tellingly, the 6.5 peak in sentiment coincided with the beginning of $SNX's upsurge. As seen by the first green arrow, $SNX skyrocketed from $1.5243 to $3.182 - a gain of 108.8% that took only slightly over 1 day to play out.
Sentiment then pulled back to the mid 5 level and peaked again at 6.7/10 (as highlighted by the second yellow arrow) on 21/06/2022 at 23:13 GMT+3 with $SNX trading at $2.9034 - giving Crowdsense users another chance to enter a quick trade.
And by 22/06/2022 at 8:53am GMT+3, just 9 hours and 40 minutes later, the $SNX price had moved another leg up (as seen by the second green arrow) to $3.5931 for a gain 23.8%.
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Nothing contained in this post should be construed as investment advice. All investment strategies and investments involve risk of loss. Any reference to past or potential performance is not, and should not be construed as, a recommendation or as a guarantee of any specific outcome or profit.