SNX Doubles on Short Squeeze – Trustnodes

Synthetix has jumped on Monday, up from $1.50 to above $3 within 24 hours as crypto sentiment seemingly changes.

The defi token is also apparently undergoing a short squeeze where those that have bet price is going down, now have to cover in a cascade up. Kain Warwick, Synthetix’ founder, said:

“The level of degeneracy that remains in this space is just mind-boggling and I say this as someone still holding OHM.”

That was in response to Vance Spencer, the co-founder of Framework Ventures, stating “trapped defi shorts paying 500-800% funding.”

Demand to short – borrow to sell in the hope price goes down to buyback – rose so much that market rates for that borrowing rose to 500% over the year.

Many therefore would have been forced to close the short, which amounts to buying SNX. That in turn increases price, sending other bears underwater, in a run for the exit but this time upwards.

There’s suggestions just 20 million SNX are unstaked and floating on exchanges. 18 million of that is borrowed to short. Hence the short squeeze.

Yet when we zoom out it’s a very different story and a very interesting story as well for all of defi.

The boom here peaked in February, not in November, last year. After February, network fees on ethereum started becoming too high. So to engage in a defi operation where you put down SNX as collateral to get sUSD which you can then use to mint say sAPPL, would have cost you between $100 to $1,000+ in fees.

We thus get this down and down to the point a meme joke now says SNX has only 12 users. Something that might start changing, but this has gone from $27 to $1.5.

The peak of bear, at least in defi? Time will say, but if there’s a turning here, eth will follow, then bitcoin will follow eth, then stocks will follow bitcoin.

That’s how it worked on the way down anyway. Defi went bear but eth had a lot of bullishness to clear first. Then that and bitcoin went bear, and stocks followed.

So a defi, at least non-bear, should feed into eth with this short squeeze indicating that bears have gone beyond euphoria in SNX.