Synthetix (SNX) Bigger than BTC One Day?
Tags: Altcoins, Btcdominance, Derivatives Market, Snx, Crypto

As you can see Synthetix does have a long history of out performing BTC (green line) even in BTC breakout year of 2017, albeit that was when Synthetix was brand new and super tiny vs. after it has attained its high market cap rank. It has established a higher high, higher low trend vs. both BTC and ETH.

Most notably, news maybe driving this recent push. An article was published on a high price target (Over $1000 per SNX) which is why the token’s sentiment is now in full gear. That and I believe because in the environment we are in (BTC breaks above ATH) speculators want to use SNX to make shorts and hedges and leveraged positions, so the user demand not speculation demand is up on SNX as well. SNX allows the token holder to establish the 500% collateralized debt position to create leverage which the trader then uses to buy more BTC ETH (as they can at MKR or COMP but the SNX exchange allows users to speculate on whatever under the sun they want whereas COMP, AAVE, and MKR et al do not).

Here is another major aspect of why SNX and UMA among other future competitors in the derivatives space may go to the moon more than BTC or ETH.

Now a few words on why all stocks are ETH or why BTC is limited to Gold etc.?

That is not really how I see this unfolding its just to make a point. ETH is more speculative than BTC like stocks are more speculative than gold (in a sense). Gold (unleveraged) is the traditional store of value, while ETH is more like a stock play on decentralized finance and crypto currency and the evolution of the entire space).

So no I don’t think currently ETH has a capture on all Stock → Crypto flows, just making a general analogy.

I believe capital flows will initially flow into BTC and ETH and BTC will remain the dominant crypto market cap until ETH perhaps takes over in the next 5 years as DeFi develops?

Timing this is difficult right now.

I don’t know when ETH will take over, but I do think BTC will need to stabilize in price and cease to give investors huge gains in order to incentivize risk taking into ETH / Alts. But that could be wrong perhaps ETH staking rewards which are now in effect is the turning point for ETH becoming the dominant currency in crypto?

I believe most money will flock to Bitcoin until we see wide adoption of BTC as a “reasonable” investment in the main stream though, and until then investors will think being cautious and not investing in alts is a “wise” thing to do. New entrants into crypto are what make markets rise, and so I believe new money will mostly come to BTC. The question is is will old money stay in BTC or will it jump into ETH & Alts as new money takes the BTC at high prices from them? If this waterfall is 1 to 1 BTC plateaus and ETH sky rockets?

To answer that we must look at stock to flows, and TVL vs market cap for coins gaining large shares of market cap and apply some micro coin economics to forecast the beta of various Alts.

How much supply is left on the exchange? What is the flow from BTC to a composite of Alts? BTC dominance relative to money flows is going to be a key indicator and we will need to chart that trend and look at resultant betas. Perhaps the best way is to simply chart Alt/BTC and Alt/ETH, and use a composite of DeFi coins index as the Alt and then use actual technical analysis rather than adding up supply numbers. That is what I’ve done above, and I think until the math is easy and data is available it is what I have to go by.

Let’s consider the medium run future where crypto is accepted as legitimate and not idiotic, but perhaps not fully adopted in an “all fiat goes to zero” scenario - you still have dinosaur boomers conducting business / trading on CME futures exchanges. What does that look like? Why does a futures trader leave the CME group and come to synthetix.exchange? What will that experience be like for him? Won’t it be similar to learning how to use email and pay bills online instead of writing checks? How will he learn it? Reading whitepapers and really being comfortable will take time. This is a much deeper and more realistic view of how to view the evolution. That being said, if pricing trends are already being shown in the market we are in the adoption curve in a place where we can make money on it, its not a wait for people to find it kind of a play. It’s here. It’s now.

BTC ETH and SNX will all do well I believe as investments but the extent SNX is able to really establish and maintain long-term upward trend lies in its ability to create a moat and not lose market share to competing derivative exchanges / coins. It must allow users (traders) the ability to do something they just can’t do on other crypto exchanges and both it and its competitors must be able to offer something the boomer cant do on traditional exchanges. I think there is potential for that, but I don’t totally understand SNX yet to say if it does that currently or not. To me, it’s just an idea and a narrative that the market is buying, but let’s go with it and research it as it rises. What I do see is the market is recognizing it as an asset they want to bet on likely because they see it as the beginning of a new bull market for DeFi as supported by it’s the leader to fully recover from the September Defi bubble pop, even stronger than Chain Link, which has not fully recovered ($12.50 from a peak at $20).

This is starting to seem like SNX may be THE story as Chain Link used to be, which is exactly why it’s important to perhaps not hodl long-term positions in alts, but to make sure you capture some gains and redistribute based on relative performance and charting. Crypto investors / traders are fickle and the capital moves from coin to coin faster than anywhere in the world.