The native token of the decentralized exchange dYdX has surged nearly 80% this week as traders assess DYDX’s potential to deal with China’s recent crypto trading ban.
DYDX price hit a new high of $26.50 on the FTX exchange, compared to trading around $13 a week ago. China’s ban is an apparent boost for the dYdX decentralized exchange (DEX), which offers perpetual contracts, margin and spot trading, and lending services to its users.
Holding DYDX entitles the owner to propose and vote on changes to dYdX's second layer protocol. DYDX stakers are rewarded by depositing into the DEX’s relevant liquidity staking pool. Users can also benefit by receiving transaction fee discounts based on the size of their DYDX reserves.
DYDX distributes or airdrops DYDX tokens to users based on their activity on its DEX platform. The lowest tier of users (trading as low as $1 on the exchange) was awarded 310 DYDX. Meanwhile, users who traded digital assets worth more than $1 million on dYdX received 9,529 tokens.
As a result, many traders holding free DYDX tokens pocketed more than $245,000 in profits as the cryptocurrency hit an all-time high of $26.50 on Wednesday. One of the traders earned about $900,000 in DYDX by having multiple accounts on dYdX.
My free DYDX airdrop is worth $900,000. good morning.
— Carter (@moneywithcarter) September 23, 2021
While the price of each token subsequently corrected by more than 10%, its daily returns remained positive, suggesting that traders intend to speculate more on DYDX’s bullish bias in the coming sessions.
Chinese FUD attracts new users
One of the main reasons they are bullish is China. On Sept. 24, the People’s Bank of China issued a notice banning all cryptocurrency-related transactions. In response, crypto assets fell, including top assets bitcoin and ethereum.
But the hardest-hit cryptocurrencies were Huobi Token (HT) and OKB, the native tokens of centralized exchanges Huobi and OKEx, respectively. Two days after the PBOC announcement, HT prices fell by 52.64%, while OKB prices fell by 43.87% during the same period.
OKB/USD and HT/USD daily price chart Source: TradingView.com
HT and OKB prices fell as Huobi and OKEx shut down their over-the-counter trading operations in China and stopped accepting Chinese user registrations on their platforms.
On the other hand, dYdX trading volumes have surged to record highs, raising expectations that Chinese traders are shifting their activity to exchanges that have no central intermediaries and do not practice know-your-customer (KYC) processes.
dYdX trading volume (in USD) Source: Token Terminal
As of Monday, dYdX facilitated transactions worth more than $4.3 billion, compared with Coinbase’s $3.7 billion.
DYDX/USD Daily Price Chart Source: TradingView.com
technology prospect
DYDX price has potential for further gains based on a supportive technical indicator.
A bullish continuation pattern, known as a Bull Flag, occurs when an asset consolidates lower within a descending channel after a strong advance. In doing so, it seeks to break the downside structure.
When it does so, the price tends to rise by an amount equal to the size of the previous uptrend. So, DYDX seemed to fit all the boxes when it formed a bull flag pattern on its 15-minute chart, as seen in the chart below.
DYDX/USD 15-minute price chart Source: TradingView.com
Therefore, DYDX is currently expected to rise to $27 or above.
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