Frax Shares (FXS) has been one of the few altcoins that has pulled off a major price performance in the market from late 2021 to early 2022. In the month between December 14th and January 14th, the FXS was up 128% against the US. 159% against the dollar and bitcoin (BTC). In addition to this impressive feat, FXS has historically topped the charts of bullish trading conditions on several occasions during this period. What’s behind the coin’s recurring strong trading outlook?
Controlling a stablecoin ecosystem
FXS is a utility token that underpins the FXS ecosystem – a stablecoin protocol that seeks to occupy a middle ground between fully collateralized and fully algorithmic stablecoins, thus harnessing the benefits of both designs. .
In accordance with the protocol’s highly “governance-minimum” approach to its architecture, there is a limited set of parameters that the community gets to adjust using the token. These include refreshing the rate of collateral – that is, the part of the protocol’s FRAX stablecoin that is stabilized through algorithms or collateral – in addition to adding collateral pools and adjusting for various fees.
FXS supply is initially limited at 100 million tokens, and the protocol is designed to deflate token supply as demand for the FXS stablecoin increases. This mechanism may account for at least some part of FXS’s momentum in recent weeks. As previously reported by Cointelegraph, FRAX added 300% to its circulating supply between the end of October and the end of December.
curve war winner
Due to this link between FRAX demand and the corresponding shrinkage in FXS supply, FRAX adoption rounds could theoretically result in waves of FXS appreciation. Evidence Supporting This Hypothesis Decentralized Finance[डीएफआई]Several recent examples of stablecoin adoption by the community can be found.
For one, the addition of FRAX to the Convex Finance platform, where several major DeFi protocols compete for voting rights that can be used to increase the yield of their respective stablecoins, preceded a drop in the price of the FXS token. There was a big jump.
Interestingly, many such FXS rallies, apparently driven by major FRAX adoption events, produce recurring patterns of trading and social activity that are detected by Cointelegraph Markets Pro’s algorithmic indicator, the VORTECS™ Score. is applied. This AI-powered tool is trained to sift through a token’s historical performance data, looking for familiar combinations of variables such as price movement, trading volume and Twitter sentiment, which are systematically linked to dramatic price movements. are first.
green means go
Here, for example, is a chart of FXS’s VORTECS™ score versus price from the week FRAX was added to Convex Finance. The indicator showed an ultra-high score the day before the coin’s powerful price spike.
Scores above 80 traditionally indicate the algorithm’s solid confidence that positions around the asset are historically bullish, while those over 90 suggest extremely high confidence. In this case, on 20 December, the token’s VORTECS™ score exploded, reaching an impressive value of 96 (red circle in the chart), with the price of FXS largely stable. Thirty-two hours after the peak score, the price of FXS increased from $13.96 to $18.27 in just 18 hours.
In the weeks that followed, FXS’s VORTECS™ score kept coming before the peak price increase. Earlier this week, two streaks of scores above 80 foreshadowed two phases of explosive price action, with one seeing the asset hit a weekly high of $41.72.
Not many digital assets display a high VORTECS™ score so often. Furthermore, internal research by CT Markets Pro shows that tokens can vary widely in anticipation of their actual price movement under historically favorable conditions. Apparently, what is happening in the case of the recent FXS rallies is that the forces driving the token’s appreciation waves are the same, leading to a familiar system of trading and social metrics that the VORTECS™ algorithm works so well with. Captures from.
Of course, the relationship between historical precedent and subsequent price action is not always so smooth. Nevertheless, in many cases, this tool – capable of parsing years of asset performance data – can be widely useful to crypto traders.
Cointelegraph is a publisher of financial information, not an investment advisor. We do not provide personalized or personalized investment advice. Cryptocurrencies are volatile investments and carry significant risks, including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and charts are accurate as specified at the time of writing or otherwise. Live-tested strategies are not recommendations. Consult your financial advisor before making financial decisions.