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Synthetix Records 12.5% Gains Despite Binance Outflows, Defying Bearish Bitcoin Trend

Sep 4, 2023 at 05:28 pm

A substantial increase in trading activity occurred as the result of a newly-established wallet making significant withdrawals, which included $7.7 million worth of SNX and $3.9 million worth of LPT tokens. This development led to a remarkable surge in SNX, the native token of the decentralized liquidity platform Synthetix, which saw a 12.5% increase in its value on Monday. These withdrawals were executed from Binance, one of the prominent digital asset exchanges.

SNX/USD Chart by TradingViewSNX/USD Chart by TradingView 

CoinMarketCap data revealed that trading volume in the past 24 hours experienced an extraordinary surge, surpassing 250%, totaling $96 million. This surge was attributed to the actions of the aforementioned wallet, which opted to withdraw substantial amounts of SNX tokens from Binance. The details of this significant withdrawal were reported by Lookonchain.

Typically, when tokens are withdrawn from an exchange, it suggests a tendency towards buying as traders prefer to have full control over their assets. This control is often sought for governance-related voting purposes or to secure a yield.

In addition to withdrawing SNX tokens, the same wallet also retrieved $3.9 million worth of livepeer tokens (LPT). This withdrawal had a pronounced impact on LPT, causing its value to surge by 17.5%.

It's important to note that these surges occurred within the context of a broader market slowdown in the cryptocurrency sector. Both Bitcoin (BTC) and Ethereum (ETH) have been trading at relatively low price levels, with BTC at $26,000 and ETH at $1,300. These values reflect a significant decrease in the overall market capitalization of the cryptocurrency market, which saw a reduction of $60 billion in just one week.

During market downturns like this, liquidity in trading pairs involving alternative cryptocurrencies often decreases, leading to an environment that is more susceptible to price volatility.

In the case of LPT tokens, for example, their market depth on Binance is currently at 2%. This means that the total value of buy orders is approximately $70,000, while the sell orders amount to roughly $270,000. Consequently, executing a trade with these low liquidity levels can lead to a significant price impact, with a mere purchase or sale of these amounts causing a 2% price movement.

On the flip side, experienced traders might exploit the situation by capitalizing on the fact that these assets were acquired under conditions of low liquidity and significant slippage during the recent buyer's transaction. This knowledge could be used to exert pressure on the asset's price, even with minor downward movements.

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