dYdX Price Prediction As DYDX Bulls Fight Off A Supplier Congestion Zone

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DYDX token bid goodbye to January in style, recording a trading volume of $2.229 million on January 31 as the price lifted from $2.3 to a high of $3.5 on the day. With such a monthly close, bulls had the upper hand starting the new month.

At the time of writing, DYDX price was trading at $3.208, which is 2.23% higher than the last day, and was recording a 24-hour trading volume of $194 million that elevated its market capitalization by 0.87% to $505.2 million.

dYdX was launched in 2021 and has since grown to become the leading decentralized cryptocurrency derivatives exchange. The platform is built atop the Ethereum blockchain and offers crypto margin trading for a wide range of tokens, including but not limited to Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and Polkadot (DOT).

To facilitate margin trading, the dYdX platform uses smart contracts, allowing users to trade cryptocurrency derivatives without any intervention from a centralized controlling authority or other third parties.

Impact of Token Unlocks Event Postponement on DYDX Price

The dYdX platform is powered by its native crypto, DYDX, which has recorded massive gains since the year started. More interestingly, the token price surged across January after the news of a token unlocks event broke out, soaring 230% to close the month with a high of $3.5. However, the event was postponed, and the token has certainly felt the impact.

📢Token Unlock Update📢

dYdX Trading Inc., dYdX Foundation and certain parties to the Warrants to Purchase Tokens signed an amendment to, among other things, postpone the initial release date applicable to investor $DYDX tokens to Dec 1, 2023

Blog: https://t.co/froqUPL3ay

🧵👇🏻

— dYdX Foundation 🦔 (@dydxfoundation) January 25, 2023

According to an official blog, the unlock event that had been scheduled for February 3 was postponed to December 1, 2023. Nevertheless, DYDX holders remain bullish.

The event is expected to see over 150 million DYDX tokens ($282 million) distributed amongst the project’s stakeholders comprising “investors, employees, and consultants.” With such a generous offer, it is easy to explain the January bull market for the DYDX token. So why is the rally still on when the event has been postponed?

Besides postponing the token unlocks event, the higher-ups have also reduced the number of tokens that had been earmarked for unlocking. Citing a paragraph in the blog:

…the unlock has been pushed to December 1, and the number of tokens set to be released into circulation has been reduced to 83 million.

It, therefore, follows that the derivatives token will maintain its limited supply until the end of the year. With the supply of tokens capped until then, demand for the DYDX token is expected to increase. Additionally, if the unlocks event went as had been planned, 150 million DYDX tokens would be added into the circulating supply, causing the derivative’s token price to drop.

As investors anticipated such a drawdown, several market players saw it as an opportunity to enter short positions against the DYDX price. However, they were compelled to close those positions after the token’s rally kicked off. This, coupled with the limited supply of DYDX tokens going forward, has fueled massive gains for the asset, and bulls are looking to the $5.165 horizon, for now.

DYDX Price Target 60.96% Increase To $5.165?

At the time of writing, DYDX was trading at $3.208, trapped within a supplier congestion zone stretching from $3.10 and $4.0. For bulls to sustain the uptrend, they would have to push the price above this bracket.

To that endeavor, they must confront the immediate resistance at $3.5. A daily candlestick close above this level would increase the chances of a breakout for the DYDX price to escape the supplier congestion zone and confront the next hurdle at $4.5.

An increase in buying pressure above this zone, therefore, with bulls driven by ambition, could see DYDX price reach the $5.165 level, marking a 60.96% increase from the current level.

DYDX/USD Daily Chart

DYDX Chart — TradingView Chart: DYDX/USD

To gather momentum for escaping the supplier congestion zone, DYDX bulls have two areas for a pause, the $2.716 and $2.138, respectively. These are potential areas for regrouping as they organize their comeback.

The upward trajectory of the Moving Average Convergence Divergence showed that the path with the least resistance was northward, with the histograms still flashing green. This was a sign that more buyers than sellers populated the DYDX market.

Additionally, the 50-day Simple Moving Average (SMA) at $1.63 was also moving upward to show more buyers coming into the market. If the trend continues, the 50-SMA will be on the path to cross above the 200-day and 100-day SMA at $1.703 and $1.711, respectively, registering a bullish cross. When a slower-moving average crosses above a faster-moving average, it often indicates the beginning of another uptrend.

Conversely, if sellers flock to the dYdX market now that bears have come in (red bars), the DYDX price could drop to lose the immediate support at $3.0, exposing the derivatives token to a free fall that could see the price tread lower than the $2.716 and $2.138 support levels.

In such a case, the odds for solace at the Simple Moving Averages (SMAs) would be low, which meant the price could retest the $1.04 support floor.

The downward movement of the Relative Strength Index (RSI) at 79 within the overbought zone suggested buying momentum was easing and a correction was possible.

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