dYdX token price analysis: beware of upcoming dilution risks
- dYdX token price has remained in a consolidation phase in the past few months.
- The developers are gearing to the mainnet launch in the near term.
- The biggest risk for dYdX token holders is dilution, which will accelerate in December.
The dYdX token price drifted upwards on Monday as cryptocurrency prices like Bitcoin, Bitcoin SV, ThorChain, and eCash soared. The token also rose as the Cosmoverse event kicked off on Monday. It rose to a high of $2.06, higher than last week’s low of $1.85.
Opportunities and risksCopy link to section
dYdX is one of the biggest decentralised exchanges (DEX) in the world, handling millions of coins every day. Therefore, like centralised players like Coinbase and Binance, dYdX thrives when cryptocurrencies are doing well. In most periods, most people buy digital coins when their prices are rising.
There are two main key opportunities that could push the dYdX token price higher. First, dYdX has moved its V4 network into a testnet as the developers aim to launch the dYdX chain soon. By so doing, they hope that the exchange will be faster, more efficient, more cost-friendly, and more decentralised.
The new version is built using Cosmos technology, which is known for its security, interoperability, and lower costs. Therefore, some analysts believe that dYdX will provide the timeline of the launch in the ongoing Cosmoverse event.
The network upgrade is the most important opportunity for dYDx. For investors, however, the network faces numerous risks. The biggest is the risk of dilution as millions of tokens are set to come to the market.
The first token unlock in dYdX will happen on Tuesday when the developers will release 2.16 million tokens to the market. These tokens are now valued at over $4.63 million.
According to its website, the lock-up expiry for dYdX holders will start on December 1 when 30% of them will be unlocked. After that 40% in equal monthly instalments will happen on the first day of the month between 1st January and June 1st 2024.
20% of the tokens will be unlocked on the first day of the month between July 1st and June 1st 2025. Finally, 10% of the tokens will be unlocked between July 2025 and June 2026. All this means that the volume of dYdX tokens in circulation is set to jump sharply in the next few months, which could affect its price.
dYdX price forecastCopy link to section
The daily chart shows that the DXYDX token has moved sideways in the past few months. It has remained between the support at $1.771 and resistance at $2.253 since July 7th. The token has moved slightly above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved above the neutral point of 50.
Therefore, I suspect that the dYdX token will remain in this range in the coming weeks. A bullish breakout will be confirmed if the price moves above the resistance at $2.25 while a bearish breakdown will be validated if it drops below $1.77.