Tezos (XTZ) is experiencing a strong end to the year. Since November, the token’s price has risen around 85% against the US dollar.
But what has caused such a meteoric rise?
Coin Rivet recently reported that Tezos will now let users stake directly from Ledger hardware wallets via the Ledger Live app, which provides passive income with greater fund security.
Tezos’ answer to staking is called ‘baking’, and it generates passive rewards for its token holders. Tezos’ price rise is therefore possibly due to the release and improvements of staking.
For those interested in token economics, staking fundamentally changes the way tokens function in an ecosystem, decreasing their usefulness as a speculative asset and increasing demand for the token as a means to generate income. This could mean greater price stability and token demand.
What is Tezos?
Tezos is an open-source platform for assets and applications. Stakeholders govern upgrades to the core protocol, including upgrades to the amendment process itself.
With Tezos, all stakeholders can participate in governing the protocol. The election cycle provides a formal and systematic procedure for stakeholders to reach agreement on proposed protocol amendments.
By combining this on-chain mechanism with self-amendment, Tezos can change this initial election process to adopt better governance mechanisms when they are discovered.
Self-amendment allows Tezos to upgrade itself without having to split (“fork”) the network into two different blockchains.
Even though Tezos’ XTZ tokens have been trading since late 2017, and at their peak each XTZ was worth over $10, the cryptocurrency fell massively during 2018 and lost over 95% of its value.
Let’s take a look at the last few months of price action, courtesy of TradingView.
Tezos fell off a cliff in late May as the market-wide sell-off hit the coin hard.
The coin fell from about $1.80 at its peak in May to less than $0.80 per coin in late October, representing a 55% drop.
However, since November, Tezos has started to gain traction once again.
Price started pumping and grew to over $1.60. It is now sitting close to $1.50 and positive volume seems to be maintaining the momentum.
With the most recent pump, all Tezos’ EMAs have crossed to the upside and the coin has formed strong support around $1.20 and $1.30. In terms of resistance, there isn’t much until the $2 level, which could be broken within the next few weeks.
As long as price remains above the 20-day EMA (the red line), I’m not expecting the trend to break.
Moreover, in BTC terms, XTZ has grown even more.
In late October, XTZ was worth around 9,000 sats per coin. Since then, price has increased towards 22,000 sats per Tezos coin.
This represents a jump of over 144%.
Although price is now consolidating, it’s still well over 20,000 satoshis per XTZ.
In BTC terms, all EMAs have crossed to the upside as well. Furthermore, the most important resistance volumes are practically nonexistent.
This means that with strong support around 10,000 sats, it’s quite possible we’ll see a minor consolidation between 20,000 and 10,000 sats before the next important move forward.
Again, the trend seems quite positive in terms of volume as well, so I expect price to keep going further. Until we are near all-time highs, I see no reason for the trend to stop.
Don’t forget though that altcoins tend to make substantial drops even during bullish seasons.