YEREVAN (CoinChapter.com) – DYDX, the native token of the same-named decentralized crypto exchange, traded at $2.07 on Jan 26 after a 100% year-to-date rally triggered by the Bitcoin surge in the same period.
dYdX traded within a flat channel that entails two parallel trendlines. They enclose the price action, preventing sharp moves in either direction. The formation stays relevant through consecutive support and resistance retests, but it does not predict a bias after dYdX exhausts the setup.
The latest retest came on Jan 1, 2023, and the digital asset’s trading volumes have ascended since then, hinting at the growing interest among traders. If so, the next target for the dYdX token would stand at $2.6, or 28% higher than the current value.
However, several fundamental factors point to a bearish long-term development. Here’s why.
DYDX is about to unlock tokens
According to the crypto analytical publication Cryptonomics, dYdX will unlock a “massive amount” of tokens on Feb 2, 2023. Typically, a token unlock can significantly hurt the asset value, at least in the short term, because the influx of coins skews the supply/demand equilibrium.
The demand no longer accommodates the heightened supply, and the price drops. According to the publication, the dYdX supply will double, and “by next year, it will be 5X which will dilute the value of each token even more.”
We can’t fully recommend shorting this token because we don’t know with certainty what the investors and employees will do with their liquid tokens.
commented Cryptonomics.
Also read: Buying Bitcoin On Lunar New Year Profitable, Says Report.
According to the dYdX website, there were 1 billion dYdX minted, which the Network will distribute over five years, starting on Aug 3, 2021. The current circulating supply is 144,108,083, according to the dYdX community dashboard.
In short, the token will bring an additional 150 million to a total liquid supply of 290 million. So, if we divide the current market value of $321 million by the new diluted supply of 290 million, it would imply a token price of approximately $1.10, which is about 50% lower than the price of $2.07 at the time of writing.
Low revenue on dYdX exchange
The crypto market suffered heavy losses in 2022, and dYdX was no exception. The chart below demonstrates the balance between the platform’s rewards and revenue in Q3 2022, even before the FTX debacle wreaked havoc on the crypto sector.
Notably, the decentralized exchanges saw an uptick after the collapse due to the investors’ increasing distrust of centralized crypto trading platforms. However, Cryptonomics reiterated their bearish predictions on the dYdX token based on the limited number of daily users. “The count is only 1,650, which doesn’t scream popular,” read the report.
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