What Next For 0x Protocol’s ZRX After Historic Rally?

Key Points

• Coinbase announced a partnership with 0x Protocol to power its NFT marketplace on Wednesday.
• The news sent 0x Protocol’s native ZRX token surging 50% higher on the day.
• But against a difficult macro backdrop for altcoins, it may be too early to bet on a ZRX bull run.

What Happened?

On Wednesday, cryptocurrency exchange Coinbase released the beta version of its NFT marketplace for a select number of customers.

The exchange announced that it had partnered with 0x Protocol, a multi-chain liquidity aggregating protocol that supports both fungible (ERC20) and non-fungible (ERC-723) tokens, to power its new NFT marketplace and reduce gas fees by as much as 54%.

As a result of the announcement, ZRX, the native governance token that powers the 0x Protocol, saw a historic rally, gaining over 50% on the day to close above $1.0 per token for the first time in 2022.

That was the cryptocurrency’s best one-day performance since February 2021, when ZRX was rallying in tandem with a broader alt-coin melt-up.

Unsurprisingly, trading volumes for ZRX have surged, with CoinMarketCap data showing 24-hour the value of ZRX to have changed hands spiked 3500% to just over $1.4B.

ZRX/USD extended gains early during Thursday trade to hit fresh year highs at $1.178, but the cryptocurrency pair has since pulled back to probe the $1.0 level.

“We’re thrilled that Coinbase is using 0x to power their new social marketplace for NFTs and anticipate this launch will unlock a massive wave of new users into the blockchain space,” said Will Warren, Co-Founder and Co-CEO of 0x Labs.

“We look forward to seeing many more apps and marketplaces take advantage of the 0x Protocol’s robust NFT swap feature set and industry-leading gas efficiency in the coming future”.

What Next for ZRX?

According to CoinMarketCap’s cryptocurrency exchange scoring system, Coinbase scores as the world’s second-best exchange, ranking ahead of the likes of Kraken, FTX, Gemini, and KuCoin and only lagging behemoth Binance.

One could reasonably argue that in securing a partnership with Coinbase, a household name in the cryptocurrency space, the probability that more crypto exchanges, service providers, and DeFi protocols turn to 0x Protocol for liquidity provision has significantly improved.

Those betting that the Coinbase partnership will be the catalyst of a new bull run for ZRX will likely be on the lookout to see if the cryptocurrency retests support in the form of the January 2022 highs at $0.99 and the earlier April highs at $0.95.

At such levels, the bulls might look to reload on longs whilst targetting a retest of H2 2022 highs in the $1.60s.

However, from a technical standpoint, things aren’t yet looking too bullish. ZRX/USD looks to still be trapped within a long-term descending triangle that has been in play since early 2021, with $0.50 acting as the floor.

These patterns tend to proceed a bearish breakout.

The macro backdrop isn’t too favourable for cryptocurrencies right now, given the environment of a generally strengthening US dollar and rising US interest rates with the Fed looking to tighten financial conditions in order to combat inflation.

Given its solid fundamentals, ZRX might be a good altcoin candidate to outperform when macro conditions turn more favourable. However, for now, the bulls may have to remain patient.