As the sun rose on a new day, digital asset enthusiasts may have noticed a significant ripple in the market landscape. The token of the decentralized liquidity platform, Synthetix, known as SNX, recorded an impressive 12.5% rise. Concurrently, a substantial exodus of the token observed from the prominent cryptocurrency trading platform, Binance, which fuelled market chatter adding to the momentum.
Often, such token outflows hint towards an increased buying pattern. Traders withdraw these tokens to retain full ownership, shielding themselves from third-party misgivings, be it security reasons or gaining an upper-hand in voting for governance, or to secure a yield. In this instance, not just SNX, but another token called Livepeer (LPT) was also withdrawn, totalling $3.9 million, catalyzing its exceptional rise of 17.5%.
Interesting to note that this intriguing upswing had its roots in an overarching stagnation clouding the ubiquitous crypto giants, Bitcoin (BTC) and ether (ETH). With the two holding steady at lows of $26,000 and $1,300 respectively, a drastic $60 billion was erased from the overall cryptocurrency market cap last week.
In these moments of market downturn, altcoin trading pairs often depict a lessened liquidity level, creating a volatility-prone environment. Elaborating on the case of LPT, the token showed a 2% market depth on Binance of a meagre $70,000 to the upside and $270,000 to the downside. It implies that even the smallest of trades moved can tip the price scale by 2%.
However, this comes with its fair share of controversy. On one side of the coin, we see an opportunity for traders to capitalize on the low-liquidity conditions and secure max profit. But on the other flip, the recent buyers could find themselves cornered. Invariably, whatever they had purchased in these conditions, any small downslide could lead them into a tunnel of firm pressure, making it hard to come out unscathed.
As we keep observing, the crypto-market continues to unfurl its layers of dynamism, risk, uncertainty, yet undying allure, keeping us on our toes. Today it was SNX and LPT, tomorrow who knows. After all, the only predictable thing about the crypto-market is its unpredictability.
Source: Coindesk
