- GMX is one of the biggest decentralized exchange (DEX) for trading cryptocurrency perpetual futures.
- It exists in the Arbitrum and Avalanche smart contract ecosystems.
- There are signs that the GMX token will continue rising in the next few years.
Decentralized Exchanges (DEXes) are important part of the blockchain industry. Unlike centralized ones like Coinbase and Binance, these exchanges are controlled by the community. They also used smart contracts, which makes them quite safe. This article will look at GMX, one of the biggest DEX for trading perpetual futures products.
What is GMX?
GMX is a company that provides a decentralized perpetual futures trading platform. It allows people to trade thousands of cryptocurrency assets with low fees. As a result, it is one of the biggest players in the industry.
According to its website, GMX has handled cryptocurrencies worth over $146 billion in its lifetime. More than 338k brokers have also used it from around the world who love its easy-to-use platform, low transaction costs, and quick execution speeds.
GMX uses two popular smart contract platforms: Avalanche and Arbitrum. Avalanche is a layer 1 network that is known for quick speeds and low costs while Arbitrum is the biggest layer-2 platform in the world. It supercharges the Ethereum network by creating a sidechain that handles transactions separately from the network.
GMX operates in one of the most competitive areas in the blockchain industry. It competes with other popular networks like dYdX, Uniswap, Curve, and Apex Protocol. Also, it competes with centralized exchanges like Binance, Bybit, OKX, Bitget, and Kraken.
What is the GMX token?
GMX token acts as the utility and governance token for the ecosystem. Holders receive 30% of the total fees that the network generates. According to the website, Arbitrum users make an APR of 5.5% while those on Avalanche make 5.78%.
The other two smaller tokens are GLP and GM. GLP is the liquidity provider for the GMX V1 markets, which accrues 70% of the fees generated there. At the time of writing, the Arbitrum and Avalanche APR’s was 25.53% and 12.14%, respectively.
GM, on the other hand, is the liquidity provider token for GMX V2 markets. It makes 63% of the total fees generated in GMX V2.
GMX, the biggest token in the ecosystem, has a total value locked (TVL) of more than $420 million. Its maximum circulation supply of 9.5 million tokens while those in circulation now stands at over 9.1 million.
What moves the GMX token price?
There are several factors that move the price of GMX. First, like other cryptocurrencies, it reacts to the broader market sentiment. It rises when investors are quite greedy and falls when a sense of fear is spreading in the market.
For example, GMX token price surged in 2021 when most cryptocurrencies were rising. It then entered a prolonged crypto winter in 2022 as digital currencies and stocks tumbled.
Second, GMX token reacts to the overall movement of Bitcoin, the biggest cryptocurrency in the world. When Bitcoin price rise, other altcoins rise as well. And when they rise, GMX’s trading platform sees more activity, leading to higher staking fees.
Third, it also moves in reaction to macro factors. In most periods, GMX rises when the Federal Reserve turns dovish and vice versa. For example, it recoiled in 2022 as the Federal Reserve started hiking interest rates.
There are other factors that affects the price of the GMX token. For example, it is affected by internal factors such as platform upgrades, token unlocks, and regulatory issues.
Is GMX a good investment?
By October 2023, GMX was not a good investment. The token initially jumped from a low of $25.25 in December 2022 and peaked at $92.20. At its peak, the coin was up by more than 268% from the lowest level on record.
As with other cryptocurrencies, GMX rally found intense selling as the Fed hiked interest rates. This decrease saw it bottom below $30 in September 2023.
Still, there are three main catalysts that could push the GMX token price higher in the future. First, the ongoing crackdown of centralized exchanges like Coinbase and Binance could draw more people to decentralized exchanges like GMX.
Second, there are signs that the American economy is slowing while bond yields have surged lately. Therefore, there is a likelihood that the Federal Reserve will pause rate hikes and possibly resume slashing rates in 2024. Historically, cryptocurrencies like GMX and Bitcoin do well when the Fed is cutting rates.
Finally, Bitcoin will go through its halving event in April 2024. In most cases, Bitcoin tends to do well ahead of a halving event. Most crypto tokens do well when Bitcoin is rising.
GMX price prediction
The daily chart shows that the GMX token price formed a double-bottom pattern between September and October 2023. In price action analysis, this is one of the most bullish signs in the market. GMX has also jumped above the 50-day and 100-day moving averages while the MACD has continued soaring.
Therefore, the outlook for GMX is bullish, with the next key level to watch being $61.85, the highest swing on July 14th. This price is about 34% above the current level.
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