Tezos, Synthetix and Yearn finance are the most recent top performers in what appears to be a DeFi sector revival.
The strength of Bitcoin’s (BTC) uptrend appears to be growing as the top-ranked digital asset soared above $40,000 earlier today. It’s probably safe to say that many investors are completely astounded by the fact that BTC has doubled its value only a month after breaking through the $20,000 mark.
This suggests that the buying has continued unabated, signaling strong demand at every higher level. This bullish sentiment has pulled several altcoins higher with the total crypto market capitalization extending above $1 trillion.
As most altcoins have only recently started participating in the rally, they may run up vertically in the short-term. The melt-up phase is one of the best opportunities to make quick returns, but it is also risky because a vertical rally tends to turn down quickly.
The tokens chosen today are in the early stages of their rally and may have room to run on the upside. Let’s look at their fundamental developments and chart structure to determine the trend and possible target upside targets.
XTZ/USD
Tezos (XTZ) has gradually been taking steps in the past few weeks to boost growth. The first was to reduce smart contract gas fees with its Delphi upgrade in November. This was done to attract developers to build applications in the decentralized finance space, collectibles, and gaming.
In early December, StableTech launched wrapped Ethereum on the Tezos blockchain and this could have attracted greater participation from users as the recent sharp increase in gas fees on the Ethereum network complicates matters for traders and DeFi sector participants.
Improving its offering further, Tezos announced the launch of its first NFT platform dubbed Kalamint that is expected to go live sometime this month. This will allow users to create and list NFTs on the marketplace priced in XTZ.
Recently, Nisbah Capital, the blockchain subsidiary of Saudi Arabia-based Taibah Valley, collaborated with the Tezos ecosystem as a corporate banker. This could eventually boost institutional adoption in the Middle East and North Africa region. While the recent developments do look positive, it’s important to determine whether the market is equally enthused with these developments.
XTZ moved up from $1.9505 on Jan. 3 to an intraday high at $2.80 today, a 43.55% rally within five days. This up-move has pushed the price to the top of the $1.80 to $2.85 range the token has been stuck in for the past few months.
Usually, if such a basing pattern breaks out to the upside, it indicates accumulation by the bulls. The longer the time spent in consolidation, the stronger the rally is likely to be.
The 20-day exponential moving average ($2.21) has started to turn up gradually and the relative strength index (RSI) is in the positive territory, suggesting that bulls have a slight advantage.
If the buyers can drive the price above $2.85 and sustain the level for a day, it will suggest the start of a new uptrend, which has a target objective of $3.90. If this level is scaled, the XTZ/USD pair could retest the all-time high at $4.4936.
However, the pair has turned down from the overhead resistance today, suggesting selling by the bears near $2.85. If the price breaks below $2.40, it could keep the pair range-bound for a few more days.
SNX/USD
The Coinbase listing on Dec. 16 triggered a rise in Synthetix (SNX) and the decentralized finance derivatives protocol has built on its strength by extending the up-move in the past few days.
The protocol completed a major upgrade dubbed Shaula on Dec. 24, which added Bitcoin as a form of collateral, increasing the potential to boost the Synth supply. Another feature in the upgrade allows users to deposit sUSD as collateral and short synthetic assets.
During a bull phase, professional traders outperform the markets by executed well-timed entries and exits. While it is difficult for novice traders to do the same, Synthetix is offering users the opportunity to trade alongside experienced portfolio managers on dHEDGE pool. This may have attracted several traders to join the community.
These new features and the strong bullish macro trend in the overall crypto market could be reasons why the total value locked in SNX is near the $2 billion mark.
SNX jumped from an intraday low at $7.154 on Jan. 1 to an intraday high at $13.38 on Jan. 5, an 87% rally within five days. The token is currently consolidating in a strong uptrend, which is a sign of strength.
The bears are currently attempting to stall the uptrend at $13.38 as seen from the long wicks on the candlesticks of the past three days. However, the bulls have not given up much ground and have bought the dips, which shows demand at lower levels.
If the SNX/USD pair does not break below the 38.2% Fibonacci retracement level at $11.002, it will suggest aggressive buying by the bulls. If the buyers can thrust the price above $13.38, the next leg of the uptrend could begin that can reach $16 and then $19.30.
However, the rally of the past few days has pushed the RSI deep into the overbought territory, which may result in a consolidation for a few more days before the start of the next trending move.
A break and close below $11.002 could signal the possibility of a deeper correction to the 20-day EMA ($8.80).
YFI/USD
Over the past few months, Yearn Finance (YFI) teamed up with several notable DeFi projects and now the team offers high yields investments that charge low fees and reduce risk to customer capital. While partnership announcements generate an enthusiastic short-term response from traders, they usually fizzle out because launching new products takes time.
One of the uncertainties that could have been bothering the community was the progress on the second iteration. This was recently addressed by a developer at Yearn who released an update on the development status.
Yearn Finance Founder Andre Cronje released details of a new protocol called “tokenized yield credit”. However, just after the launch, a developer warned of an exploit on the protocol. Such delays and warnings could have kept the risk-averse investors at bay and this partially explains why YFI price had been relatively stagnant for some time.
However, on Jan. 7 Binance announced that it would launch staking for YFI and this move could be the reason for the sharp bump in the DeFi token’s price.
YFI rallied from an intraday low at $20,381.88 on Jan. 3 to an intraday high at $37,185 today, an 82% rally in five days. With the sharp up-move today, the token has broken out of the neckline of an inverted head and shoulders pattern.
This bullish setup has a target objective at $55,000 but it is unlikely to be a straight dash to the upside. The long wick on today’s candlestick suggests aggressive selling above $34,204.24.
The bears may now try to pull the YFI/USD pair to the neckline of the reversal pattern. If the price rebounds off this level, the bulls will once again try to resume the uptrend.
If the pair rises above $37,500, the uptrend could retest the all-time high at $43,966.31. If the bulls can propel the price above this resistance, the momentum may pick up and that may carry the pair to $50,000 and then to $55,000.
This bullish view will be invalidated if the bears sink and sustain the price below the neckline. Such a move could invalidate the bullish pattern and pull the price down to the 20-day EMA ($24,424). The trend may turn in favor of the bears if the $18,000 support cracks.
The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk, you should conduct your own research when making a decision.
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