dYdX token sell off preasure and short trade

16 нояб. 2023 г.

📊 Bazistrades|Trades|DeFi|FinTech|

🔲Summary

The controversy surrounding the dYdX tokenomics and staking rewards just before a significant raises concerns within the crypto community, as critics argue that staking appears favorable to insiders, potentially leading to a substantial sell-off and price pressure. According to TokenUnlock, on December 1, the unlocking of dYdX tokens will increase their circulating supply by almost 80%, from 190 million to 340 million

🔲Survey

As the mainnet of dYdX's first layer launches, offering staking rewards, disputes arise over the timeframe of the staking rewards set just weeks before a significant token unlock. It's worth noting that the unlocking of 150 million DYDX tokens in December 2023 will double the circulating supply and may lead to substantial selling pressure from investors.

The to introduce staking rewards right before a major token unlock raises questions in the crypto community, with concerns that dYdX staking might be overly advantageous for insiders. Additionally, tokens owned by dYdX insiders can participate in staking and receive rewards.

Detailed analysis of DYDX holders, including insiders, market makers is provided by Data Nerd on X

dYdX founder Antonio Juliano on X that staking rewards will be paid in "hard currency – US dollars."

Dennis Liu, a well-known crypto venture investor and YouTuber, emphasized that the dYdX token unlock schedule has always been public, and the tokenomics remained unchanged. However, he noted that dYdX has been less transparent regarding the ability of insiders and investors to stake their portion of locked tokens.

In response to criticism of the dYdX staking activation, Juliano highlighted that the team has been in existence for "6.5 years."

💬"We are not leaving the project; we are building something greater. And we will work to earn your trust over time," Juliano wrote.

The price of the dYdX token increased by 35% during the week of the beta mainnet launch. However, the token unlock increases the supply, often leading to selling pressure and price declines.

According to TokenUnlock, the unlocking of dYdX tokens on December 1 will almost double their circulating supply, from 190 million to 340 million.

🔲 Trade Setup

Given the concerns and the potential impact of the token unlock on the price of dYdX tokens, I am inclined to open a short position. I will start accumulating a short position within the range of $3.963 - $4.520, considering the possible selling pressure. The decision to introduce staking rewards just before a major token unlock, coupled with concerns about transparency, raises red flags 🚩🚩🚩

📊 This strategy is based on the assumption that the market will react to the substantial increase in circulating supply, creating a selling opportunity for short-term gains.

Estimation of Expected Profit:

Entry Range: $3.963 - $4.520
Exit Price: $2.568
Expected Profit = 43.10%

Please note that trading involves risks, and market conditions can change rapidly. It's essential to stay updated on the situation and adjust the strategy accordingly.