Synthetix and Bitcoin are as different as two blockchain projects can be. But as we approach 2022, many potential cryptocurrency investors are wondering which of these tokens can provide better returns: the established market leader that has attracted large amounts of institutional investment, or the more advanced platform that seeks to expand DeFi’s possibilities?
If you ask most people to name a cryptocurrency, even in 2022 they will almost invariably name Bitcoin, as it remains the most famous token hands down.
However, the last few years have seen a great deal of change within the cryptocurrency industry and the growth of Defi and the NFT Trend have shed light on just how limited the 13-year-old Bitcoin architecture is.
DeFi, in particular, has become one of the most important, not to mention most popular, features of the blockchain world. While Bitcoin offered a digital alternative to fiat currency, the industry has evolved to provide cryptocurrency holders with a host of decentralised financial services, mimicking those found in the world of legacy finance.
One of the latest applications of DeFi, which has attracted considerable attention in the last 18 months or so, is the concept of the cryptocurrency derivative. Effectively, tokens can be used to represent the price of any asset, whether real-world or digital. And Synthetix is currently the leading platform in the space.
So, looking at Synthetix vs Bitcoin, which token represents the better investment? There are a few factors to consider when weighing these two tokens. In the following article, we’ll look at the technical details of each coin, as well as hear what leading analysts predict for their future price movement.
SYNTHETIX VS BITCOIN – THE BASICS
When it comes to technical superiority, it would be unreasonable to expect Bitcoin to be able to compete with Synthetix, given that the former was launched some 9 years earlier. However, when weighing up Synthetix vs Bitcoin, or any other cryptocurrency pair, a good rule of thumb is to start with their key fundamentals.
Synthetix
Background
Synthetix began its life in 2018 and was originally called Havven, a platform that was created to mint stable coins. However, it wasn’t long before the project reassessed things and a few months after its launch turned its attention to synthetics, the term for cryptocurrency-based derivatives.
To understand Synthetix, it is important to know what derivatives are. They are a popular type of financial instrument that derives value from the price of an underlying security. For example, when you buy and sell a CFD or options, two popular types of derivatives, you are not taking ownership of the underlying asset, but speculating on its possible price movement.
Naturally, the concept of a derivative lends itself well to the world of cryptocurrency, as tokens can be created to represent the value of almost anything from gold to other cryptocurrency tokens. Synthetix’s infrastructure offers Ethereum-based tokens that do just that.
Platform fundamentals
The Synthetix platform can mint ERC-20 tokens to track the price movement of an underlying asset. To do this, it needs to have a data feed on the value of that asset. To do this, Synthetic leverages decentralised oracles through Chainlink. These oracles provide the price feeds of the real-world assets that the Synths represent.
Some readers may be thinking that Synths are similar to stablecoins – and in a sense they are correct. Both types of tokens are linked to the value of another asset. However, unlike some stablecoins, Synths are not backed by reserves and a system of algorithms and smart contracts, facilitated by Synthetix, is what gives them their value.
The Synthetix platform handles the minting of Synths, or sTokens, as well as offering an exchange where they can be bought and sold. The advantage of synths being ERC-20 tokens is that they can potentially be used with many other leaders. DeFi projects. The foundation of the entire Synthetix system is powered by the project’s native token, SNX.
The SNX token
The synthetic network token plays an essential role in the wider Synthetix ecosystem. More
Importantly, it is SNX that is staked to mint Synths, or sTokens. Again, this is a similar mechanism to the one MakerDao uses to mint stable coins. However, in addition to fiat currencies, SNX can also be used as collateral to create an sToken representing any other asset, including commodities and stocks.
When creating Synths, a collateralisation ratio of 600% applies. Therefore, if you want to create $100 in sUSD, you would have to pledge SNX equivalent to six times that value. It is through this principle of collateralisation that Synthetix keeps its Synths stable.
In addition to its key role in the Synthetix protocol, SNX is also used in the governance of the project. Token holders can vote on important developments and updates, effectively steering the direction of the project.
Bitcoin
Background
The history of Bitcoin is fairly well documented at this stage. When the token was originally launched in 2009, it was truly revolutionary and offered to completely disrupt the traditional financial world. In the original white paper, Satoshi Nakamoto had given the world its first secure and decentralised digital currency.
Early Bitcoin investors saw some impressive returns and, as more and more tokens were launched, the potential of cryptocurrency became an almost constant feature in discussions about the future of business and finance, and Bitcoin quickly became synonymous with cryptocurrency. In fact, the term was and still is used interchangeably.
However, while Bitcoin introduced the world to blockchain technology and its significant potential, it has ultimately failed to catch on as a genuine alternative to cash because small-scale transactions are simply too costly, both in terms of fees and the resources required by the network. As such Bitcoin has largely become an investment asset for large companies seeking to hedge against the economic downturn in traditional equity markets.
Transactions and speed
Compared to smart grids in the market, Bitcoin transaction rates are quite slow. Of course, this is to be expected: after all, the market moves quickly. But producing around 5 transactions per second and with a block creation time of ten minutes, Bitcoin will never be able to support high-volume transactions.
Bitcoin relies on the proof-of-work consensus mechanism, in which ‘Miners’ on the network compete to solve equations to verify new blocks. When they do, they are rewarded with BTC. Unfortunately, this process is extremely resource intensive and slow. For this reason, the latest platforms tend to rely on the much faster proof-of-stake mechanism.
When it comes to technical performance, then Bitcoin vs Synthetix is not really a comparison. However, we should remind readers that from a speed perspective, Bitcoin was outperformed many years ago, yet it continues to dominate the market.
Supply and demand
As mentioned above, miners in the Bitcoin network are rewarded for verifying blocks. This is how new BTC are released into the system. However, the block reward is halved at certain intervals, approximately every four years. For example, in 2012, miners earned 25BTC for each block they completed. In 2016, that figure was halved to 12.5 BTC. In 2020, it became 6.25 BTC.
This means that, as the years go by, fewer and fewer new BTC tokens are being released. The total supply of Bitcoin is also limited to 21 million. In theory, these factors mean that Bitcoin is increasing in scarcity as time goes on, which in theory could increase its value.
In addition, Bitcoin has become popular with institutional investors who acquire large sums to hold for the long term. Again, this effectively removes BTC from circulation and contributes to the token’s increasing scarcity.
SYNTHETIX VS BITCOIN: WHICH IS THE BETTER INVESTMENT?
Synthetix has a lot of potential, especially if cryptocurrency-based derivatives gain anywhere near the popularity that their traditional counterparts have. But Bitcoin has yet to be seriously challenged as the most valuable cryptocurrency on the market.
Of course, it is growth that interests investors. To try to measure Synthetix vs Bitcoin from an investment perspective, we have to consider a few things with respect to the price of each token.
Bitcoin vs Synthetix: Price History
Before we can look at future predictions, it’s first worth taking a look back at how each platform’s native token has performed in the past. After all, this is the data that is used to generate price predictions.
SNX
Synthetix hit the markets in March 2018, but made very little impact at first, with SNX valued at around $0.35 for the first week or so, before gradually sinking to below $0.15 throughout the second half of 2018.
The first few months of 2019 remained fairly quiet for Synthetix, with the occasional rally sending the price to around $0.30. The summer of that year saw SNX begin to pick up the pace and in November prices shot up to $1.52, marking a growth of around 1420% in 10 months.
After the price surge in late 2019, SNX held its price well for a few weeks and traded above $1 until prices plummeted after April 2020. For several weeks, the token struggled to return to $ 0.70. Prices remained subdued until July, when SNX suddenly shot up to $2. The upward trend continued at an impressive pace and by September the token was trading at an average of $7.43.
Once again, the token struggled to maintain its gains and by November had almost halved in value. However, the token saw another significant increase in the last days of December, sending it from $4.39 to $7.22.
SNX continued to thrive in 2021 and in February reached its all-time high of $28.35, marking an impressive increase of almost 300% for the year to that point. The following weeks saw substantial volatility and at one point SNX had plummeted to $13.27. However, it had recovered to $26.16 before the cryptomarket collapsed and prices plummeted to $6.60 in June.
By September 2021, SNX had climbed back to around $15, but as 2022 arrived, the cryptocurrency market entered a fairly significant downturn, with major tokens losing significant value.
BTC
Bitcoin’s price has always been used as an indicator of the overall health of the cryptocurrency market. Simply put, where BTC goes, other tokens tend to follow. However, in its early days, Bitcoin only built a reputation for substantial price swings. For example, the token started trading at fractions of a cent, but only a few years later, in 2013 0 it reached a trading price of $1,242.
Of course, the token has also become notorious for its occasional crashes. The most notable was during the cryptocurrency ‘bubble’ of 2017/2018, in which BTC peaked at $19,783 before a market-wide recession hit and sent its price to $3,430 later that year.
However, despite the downturn, by this stage Bitcoin had already built a reputation as an investment asset that could offer substantial returns. It was not long before buyers returned and the price of BTC began to rise. By January 2021, the token had reached an unprecedented $40,000. A few weeks later, BTC reached $64,804.
The summer of 2021 saw some slowdown for the cryptocurrency market, but by November BTC had recovered and soared to a new high of $69,044. This rise was followed by a market slowdown that persisted through January and February 2022.
Bitcoin vs.Synthetix: future predictions
The price data we have seen can tell us a lot about how each token is moving relative to the broader market, as well as how it may respond to certain market forces. Ultimately, however, investors are more concerned with what is likely to happen in the future. With this in mind, we review several price predictions for Bitcoin vs Synthetix.
As always, we must emphasise that these forecasts are effectively guesses based on past price analysis, they are not guaranteed.
Synthetix
Synthetix has shown that it is capable of significant price increases, but it has also shown a propensity for volatility. Going forward, it seems that many analysts expect price fluctuations to continue, but with SNX growing in value overall.
For example, DigitalCoinPrice believes that the token will rise by around 46% in October, with a trading price of $6.07. However, by December it will have fallen to $5.65. Similarly, by April 2023, the token could reach $7.29, but only three months later it will sink to $5.97. By the end of 2025, however, SNX is expected to trade at $9.01.
Meanwhile, TradingBeasts sees Synthetix struggling throughout 2022, as the cryptocurrency slowdown continues to bite. However, by December 2023, the platform expects SNX to have reached a potential high of $7.05 and an uptrend is expected to continue well into 2024. By 2025, TradingBeasts’ forecast suggests that SNX could once again break the $10 barrier.
Finally, CoinPriceForecast has made the most optimistic synthetix price prediction. Its technical analysis suggests that the token could increase in value by as much as 56% over 2022. Throughout 2023, growth is expected to slow somewhat, but by 2024 the token could reach an average trading price of $7.34.
BTC
If we look at Bitcoin vs Synthetix from a forecasting point of view, then it seems that the former presents the more stable investment. In fact, Bitcoin has come to be seen as the “safe” option for cryptocurrency investors, but don’t be fooled. BTC, like any other digital asset, still comes with a high degree of risk.
So what do analysts predict for the original cryptocurrency? Well, DigitalCoinPrice predicts that Bitcoin may take its time to recover, but will ultimately deliver solid returns. It has BTC trading at $56,570 by the end of 2022, a 36% increase on the current price, but still well below its peak trading price. By the end of 2023, the token is expected to have reached a new high of $73,184 and by 2024 we could see BTC surpass $90k per token.
Elsewhere, WalletInvestor sees Bitcoin recovering well before the end of 2022 and reaching an average trading price of $71,328 in December. It then predicts that the token will perform well throughout 2023, with the potential to get very close to the long-awaited $100k barrier. WalletInvestor’s prediction believes BTC will reach this milestone in 2024, trading at an average of $106,931 by the end of the third quarter.
Finally, TradingBeasts predicts that Bitcoin will not reach a new record high for several years. According to its analysis, BTC will struggle to maintain its value throughout 2022 and by the end of 2023 could be down as much as 32%. However, recovery will begin in 2025 and by December of that year BTC could reach a new ATH of $75,884.
Of course, these predictions are highly speculative, but they help us to weigh Bitcoin vs Synthetix from an investment perspective and somewhat indicate the current market sentiment for each project.
Synthetix vs Bitcoin: what the experts say
We have analysed the Synthetix vs Bitcoin price data and that certainly gives us an idea of what we can expect from each project, but another option we have is to listen to business and finance experts on what they think the prospects are for Bitcoin and Synthetix.
For example, Mike Novogratz of Galaxy Digital has long been a vocal advocate of Bitcoin. Even during the January market downturn, Novogratz made a $1 million bet with crypto-sceptic stockbroker Peter Schiff that BTC would trade above $35,000 within the year, and he was right. In fact, Bitcoin had recovered $35k just over a month later.
Novogratz believes that institutional investor interest will continue to drive Bitcoin to new heights in the coming years.
Meanwhile, a Carnegie Mellon University CyLab study has suggested that cryptocurrency derivatives markets are booming, with some days seeing more than $100 billion in trades, a volume that rivals the New York Stock Exchange. Looking ahead, CyLab’s Nicolas Christin, co-author of the study and a professor at the Software Research Institute, says that “cryptocurrency derivatives markets are starting to dwarf normal markets, and this affects not only those immersed in the crypto world, but even those outside of it”.
This is certainly good news for Synthetix, which is currently the leading platform for crypto derivatives.
SYNTHETIX VS BITCOIN: CONCLUSION
Weighing Synthetix vs Bitcoin is difficult, as the projects are very different. Synthetix is well positioned to capitalise on the growing appetite for cryptocurrency derivatives, but these are notoriously risky investments, even in the world of traditional finance, and Bitcoin may appear a safer bet in comparison.
However, while Bitcoin is likely to offer more stability at this stage, we advise against viewing it as a safe option alongside Synthetix. The reality is that both projects are exposed to similar risks, the main one being regulation in different jurisdictions. It is also worth noting that Bitcoin’s price more or less halved between 2021 and 2022, so its price is anything but stable in the short term.
The price predictions we consulted in our Synthetix vs Bitcoin comparison suggest that 2022 could be a difficult year, but ultimately every project will see growth throughout 2023 and 2024. While these are by no means guaranteed, expert commentary suggests there are plenty of reasons to be optimistic about both tokens.
Synthetix is undoubtedly the more advanced platform, but Bitcoin remains the market leader by a considerable margin. The bottom line is that both tokens are interesting investment opportunities and adding both tokens could offer a good degree of diversification to any cryptocurrency investment portfolio.
The next year or so looks to be an exciting time for the cryptocurrency market. If you are looking to begin your investment journey, then there are a few things you will need. Firstly, you will need a wallet to store your tokens. There are plenty to choose from and our wallet guide will help you choose the right one for you.
Next, you need to find a reliable exchange or broker that can give you access to the market. There is a lot to choose from, but we believe that eToro is the best choice, especially for new investors.
With an excellent reputation and an award-winning platform, eToro offers a secure environment where you can buy and sell several major cryptocurrencies, including Bitcoin and Synthetix.