Synthetix (SNX) climbs 25% to a monthly high shortly before the start of the Layer 2 exchange

Synthetix (SNX) price hit a one-month high on Monday as traders looked for alternative bullish bets against the mixed crypto market.

The SNX / USD hit an intraday high of $ 13.76 during the Asia-Pacific session, after a rally of around 25% that began on Sunday. A variety of technical and fundamental factors have contributed to the surge in market demand for SNX, including founder Kain Warwick’s update on the project’s highly anticipated Layer 2 solutions.

Exchange layer 2

Layer 2 deals with blockchain scaling techniques by calculating and loading transactions from the higher-level layer and feeding them into the base layer. Synthetix, an Ethereum-based platform for synthetic assets, has been testing such scalability solutions since October 2020 in order to limit its dependence on Ethereum’s higher gas and transaction fee model.

Last Saturday, more than 12 hours before the SNX / USD started rising, Warwick did notification Synthetix will start a Layer 2 exchange on July 26th. He also revealed that Optimistic Ethereum (OΞ) has the underlying technology that will power the synthetic assets (or synths) trading platform.

Source: TradingView

“The first synths supported will be sETH, sBTC and sLINK. In addition, Chainlink is also implementing a price feed for SNX, ”announced Warwick.

Optimistic Ethereum, formerly known as Plasma Group, proposes scaling the Ethereum blockchain through a unique mechanism called rollup. Rollups are Ethereum-based smart contracts that receive transaction data from the main layer of the blockchain and send it to L2, where the calculation takes place. Then it receives the calculation result from L2.

Source: Messari

So far, the Optimism team has proven it can handle more transactions with lower fees than Ethereum. Meanwhile, Synthetix has chosen to be one of the early adopters of Optimism in the expectation that it will inspire other decentralized finance projects to adopt it as well.

Will Comyns, a researcher at Messari, writes in the June 23 report:

“If other major DeFi protocols can adopt optimism, all transactions between them can stay on L2. This means that users don’t have to wait a whole week for their coins to be reintegrated into the main Ethereum chain before they can interact with another protocol. “

So far, Optimistic has worked in Synthetix’s favor, in part because SNX acts as a token of security for the creation of Synth. In return, stakers receive additional SNX in addition to their stakes through Synthetix’s “inflation supply” model. You also get a flat fee in SNX when trading Synth.

Golden cross

Synthetix’s latest 25% pump has pushed the 20-day exponential moving average (20-day EMA; green wave) above the 50-day simple moving average (50-day SMA; blue wave). Hence, the golden cross 20-50 MA is a tool to predict the price rally from November 2020 to March 2021.

Source: TradingView

However, the SNX / USD remains at a crossroads with the $ 13.85 to $ 14.8 resistance area, a range that has historically curbed the pair’s upside attempt and also served as short-term support. Correction from February to May 2021 resistance area will be able to test the Fibonacci range from $ 16.37 to $ 17.69.

Conversely, a strong pullback of $ 13.85 to $ 14.8 should push the SNX / USD towards the range of $ 11.92 to $ 10.74. Such a move also risks invalidating the golden cross setup mentioned above.

Annie

According to Cointelegraph

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