Stacks price is recovering; gains could be short-lived
Stacks price has seen a notable recovery this week, driven in part by the strong performance of Bitcoin and other altcoins.Â
The STX token has risen for four consecutive days, and has moved to $1.6774, which is about 32% above its lowest point this month. This rebound has brought its market cap to over $2.4 billion.
Stacks price chart
Stacks recovery continues
Stacks, a layer-2 network for the Bitcoin network, has bounced back due to the ongoing Bitcoin rebound. Bitcoin has risen from last week’s low of $53,700 to over $58,000, despite the continued movement of coins from German and Mt. Gox wallets to exchanges.
Bitcoin’s rebound has triggered gains for the altcoin market, with coins like Aave, Uniswap, Lido DAO, and Jasmy rising by double digits.Â
Stacks has also recovered as the volume of assets in its Decentralized Finance (DeFi) ecosystem has increased. The network has over 53 million STX in TVL, up from last month’s low of 44.6 million STX. In dollar terms, the TVL has jumped from June’s low of $60.2 million to $80 million.
Most dApp networks in Stacks, like StackingDAO, Zest, Alex, and Bitflow have seen their TVL jump by over 15% in the past 7 days.Â
Additionally, the recently launched Grayscale Stacks Trust (STX) has seen its assets jump to over $2.1 million, a sign that there is demand.
Stacks price recovery could be brief
Stacks recovery faces three main risks. First, the rebound could be a dead cat bounce, where an asset in a strong downtrend stages a brief recovery.
Second, the STX token formed a death cross on June 24th. A death cross is a pattern that forms when the 200-day and 50-day Exponential Moving Averages (EMA) cross each other. In most cases, this pattern leads to more downside.
Finally, analysts caution that Bitcoin faces substantial hurdles that could affect its price. Bitcoin miner capitulation is continuing while Germany and Mt.Gox wallets have started flooding coins in the market.
In a statement on Wednesday, Anthony Pompliano, a well-known crypto investor warned that these releases and the lower volume could impact Bitcoin’s price. In another Tweet post, Ki Young Ju noted that Bitcoin could hover between $47,000 and $48,000 for a while.
These factors could hurt stack prices because of the close correlation that exists between Bitcoin and other altcoins.
