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Frax Share (FXS) has been one of the few altcoins that has dominated price performance in a sluggish market in late 2021 and early 2022. In the month from Dec. 14 to Jan. 14, FXS gained 128% against the U.S. dollar and 159% against Bitcoin (bitcoin). In addition to this impressive feat, FXS has also topped the historical bullish trading condition chart several times during this period. What’s behind the coin’s recurring strong trading outlook?
Manage the stablecoin ecosystem
FXS is the utility token that underpins the Frax ecosystem – a stablecoin protocol designed to occupy the middle ground between fully collateralized and fully algorithmic stablecoins, thereby taking advantage of both designs.
Based on the protocol’s highly “governance-minimized” approach to its architecture, the community can use the token to tune a limited set of parameters. These include refreshing the collateralization ratio—that is, the protocol’s share of the FRAX stablecoin, stabilized algorithmically or through staking—in addition to increasing the collateralization pool and adjusting various fees.
The supply of FXS is initially capped at 100 million tokens, and the protocol is designed to deflate the token supply as demand for the FRAX stablecoin rises. This mechanism may be at least partly responsible for FXS’s momentum in recent weeks. As previously reported by Cointelegraph, FRAX’s circulating supply increased by 300% Between late October and late December.
curve war winner
Because of this link between the demand for FRAX and the corresponding reduction in FXS supply, multiple rounds of FRAX adoption could theoretically lead to a wave of FXS appreciation. Evidence to support this hypothesis can be found in several recent examples of the decentralized finance (DeFi) community adopting stablecoins.
On the one hand, FRAX’s In addition to convex financial platformsBefore the FXS token price surge, several major DeFi protocols competed for voting rights that could be used to increase the yields of their respective stablecoins.
Interestingly, many of these FXS rallies were clearly inspired by major FRAX adoption events, producing recurring patterns of trading and social activity that were Cointelegraph Markets Pro Algorithmic metrics, VOLTECS™ scores. The 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, that systematically precede dramatic price movements.
green means go
For example, here is a chart of FXS’s VORTECS™ score versus FRAX’s price for the week that it was added to Convex Finance. The indicator flashed super high scores more than a full day ahead of the coin’s strong price surge.
Scores above 80 generally indicate strong confidence in the algorithm that the conditions surrounding the asset are historically bullish, while scores above 90 indicate extremely high confidence in the algorithm. In this case, on December 20, the token’s VORTECS™ score exploded to an impressive 96 points (red circle in the chart) as the price of FXS was largely flat. 32 hours after reaching the top score, the price of FXS surged from $13.96 to $18.27 in just 18 hours.
Over the next few weeks, FXS’s VOLTECS™ score continued to spike ahead of price spikes. Earlier in the week, two consecutive scores above 80 heralded two stages of explosive price action, including a stage in which the asset hit a weekly high of $41.72.
Not many digital assets show high VORTECS™ scores so frequently.Additionally, CT Markets Pro’s internal research shows that the token is Historically favorable conditions predict its actual price movement. Apparently, as has been the case with the recent FXS rally, the forces driving the wave of token appreciation are similar, resulting in the VORTECS™ algorithm being able to capture familiar arrangements of trading and social indicators well.
Of course, the relationship between historical precedent and subsequent price action is not always smooth. However, in many cases, this tool – capable of parsing years’ worth of asset performance data – is very 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 that carry significant risks, including the risk of permanent and total loss. Past performance is not indicative of future results. Figures and graphs were correct at the time of writing or otherwise stated. Field-tested strategies are not recommendations. Please consult your financial advisor before making a financial decision.
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