DYDX is currently leading the bullish charge on Decoin after registering an impressive rally but even more interesting are the underlying factors fueling that rally. Factors that highlight the future of the cryptocurrency market. Before we get into the thick of things, it is important to understand what DYDX is all about.
What is DYDX?
DYDX is an Ethereum-based margin trading exchange platform designed to facilitate leveraged cryptocurrency trading. It is one of the trading platforms on the DeFi frontier that aim to provide crypto traders with features previously only accessible in the traditional finance market. Its native token which goes by the same name as the platform traded at $26.21 at the time of this press after rallying by 32.56% in 24 hours.
DYDX was recently listed on Decoin and it has since then enjoyed significant gains. It traded as low as $11 when it was listed on September 15 and has more than doubled since then.
Figure 1 Source: Decoin
Why China’s recent crypto assault might be responsible for DYDX’s rally
China has a huge impact on the cryptocurrency market mainly because of the large number of crypto traders from the country who contribute to a significant proportion of crypto trading volume. This is why cryptocurrencies always experienced a significant dip whenever China announces a crypto ban. This is exactly what happened recently after regulators in the country extended their crypto ban to include some of the remaining loopholes.
The recent ban prevents crypto exchanges from providing cryptocurrency services to Chinese citizens. The extended ban has forced Chinese crypto holders to switch to decentralized platforms such as DYDX through which they can access the market but also execute leveraged positions for maximum potential gains.
Banning centralized exchanges from providing crypto services to Chinese traders has only forced them to embrace decentralized exchanges. All that trading volume has to go somewhere. This development is important because it highlights the potential outcome if the governments of other countries such as the U.S will also implement stringent measures against the crypto industry. This is particularly relevant now that the U.S Senate is about to vote on the infrastructure bill which will impose some strict rules on exchanges.
Some of those rules include strict KYC measures and notifying the IRS of any transactions above $10,000. The measures are aimed at facilitating better crypto taxation but they might also push more traders towards decentralized exchanges or to centralized exchanges not registered in the U.S. Either way, it looks like DEXes such as DYDX might continue to enjoy more trading volume especially depending on the Infrastructure bill’s impact.
Should you buy the DXDY token?
China’s ongoing crackdown has already yielded a favorable outcome for DYDX and highlighted factors that may push more users towards its platform. Its trading volume has been rivaling that of centralized exchanges and it is currently achieving more trading volume than other decentralized exchanges. The demand for the native token has also gone up and this explains its latest bullish performance when most of the top cryptocurrencies have been bearish in the last few days.
DYDX currently has a $25.6 billion market cap with 55.67 million tokens in supply. Higher demand means it has some potential upside even at its current price range and will likely continue experiencing more trading volume as the DEX wave continues to gain traction.