Foot To Foot #6 STX and Stacks

A Foot Guns community members shares an investment thesis.

Mar 17, 2023

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A Degen’s Take On STX

From October 2022 I’ve felt bullish on STX token and started DCA’ing, hodling and staking the token. This is a quick synopsis on STX, provides some pros and cons on the token, and even though I’m bullish, I try to provide a bull and bear case. Since I started buying in October 2022 the token has ranged from USD0.22 to >USD1. It is currently trading as I write this at USD1.02.

STX is the native token of Stacks, a decentralized network that enables smart contracts, decentralized applications (DApps), and non-fungible tokens (NFTs) on top of Bitcoin, i.e., the Stacks network aims to bring DeFi and Web 3.0 applications to Bitcoin. STX holders can participate in consensus, earn BTC rewards, and access DApps built on Stacks.

Some pros of investing in STX are:

STX leverages the security and popularity of Bitcoin.
The Stacks blockchain is designed to enable developers to build decentralized applications that can interact with Bitcoin.
STX has a limited supply of 1.32 billion tokens, which (attempts to) create scarcity and potentially increases its value over time.
Stacks has a unique consensus mechanism called Proof of Transfer (PoX), which allows users to earn STX tokens by locking up Bitcoin. This creates a strong incentive for Bitcoin holders to use Stacks, which could drive demand for STX.
The Stacks network has a growing ecosystem of decentralized applications, including Blockstack and Hiro, which could drive adoption of STX.
Stacks has a bridge to Ethereum, allowing developers to build decentralized applications that can interact with both Ethereum and Bitcoin.
STX benefits from the growing demand for NFTs, especially Bitcoin NFTs, which are enabled by Ordinals, a protocol that allows users to mint NFTs directly on the Bitcoin blockchain.
Stacks has a passionate and active community that is committed to building and growing the network.

My personal view is STX is currently trading at a competitive price compared to other Layer 1 cryptocurrencies with similar market caps.

Some cons of investing in STX are:

STX faces competition from other platforms that offer smart contracts, DApps, and NFTs on different blockchains, such as Ethereum, Solana, Cardano, etc.
STX is subject to regulatory uncertainty and compliance issues.
Like all crypto, STX is volatile and susceptible to market fluctuations and external factors that may affect its price performance.
Stacks is not immune to network congestion issues, which could impact the performance of decentralized applications built on the platform.
STX is currently listed on a limited number of exchanges, which can limit its liquidity and make it harder to buy and sell.
Stacks is heavily reliant on the Bitcoin network, and any issues or limitations with Bitcoin could impact the Stacks network.

A possible course of action over the short-term for a bull trader could be:
Buy or long buy STX at its current price or near its support level (around USD0.75) to profit from its upward movement.
Set a take-profit order to lock in gains when STX price reaches its target level (around USD1.20) or higher.

A possible course of action over the short-term for a bear trader could be:

Sell or short sell STX at its current price or near its resistance level (around USD0.85) to profit from its downward movement.Set a stop-loss order to limit
losses in case STX price reverses and breaks above its resistance level.

I use Xverse Pool (https://pool.xverse.app/stacking) for my stacking of STX. This staking option pays rewards in BTC. There are other options that pay varying returns and varying coins (usually BTC or STX) as rewards.

DYOR, and monitor market trends and news related to Stacks, Bitcoin, NFTs, Ordinals, and other relevant factors that may influence STX price direction. Note, when I first intended to write this article last weekend STX was trading at USD0.59, and just five days later when I got around to writing it the coin is trading > USD1 (sorry), but I believe there is still more potential for a run in the coin over time yet.

Disclaimer: The information provided in this article is for educational, informational, and entertainment purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The author of this article is not a financial advisor, attorney or other professional and does not provide any financial or legal advice. You should consult with an financial advisor, attorney or other professional to determine what may be best for your individual needs. The author of this article does not accept any responsibility or liability for any investment or other decisions made by you based on the information provided in this article. You should do your own research and verify all facts before making any financial transactions involving cryptocurrencies.