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Why is Nexo (NEXO) Price Rallying?

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NEXO

Cryptocurrency project Nexo (NEXO) may not be the top-ranking asset, given its position as the 88th largest coin by market cap, but it is certainly one of the top-performing projects right now. The coin saw a significant price increase over the last few days, which made it attract the eyes of traders and analysts alike.

What is Nexo about?

Nexo is a blockchain-based lending platform that allows users to obtain instant loans backed by cryptocurrency. Essentially, all that users need to do is deposit one of four accepted coins that they own but do not want to spend, including Bitcoin, Ethereum, XRP, or Litecoin. After providing collateral in the form of one of these coins, they can instantly receive a loan in the form of either stablecoin or fiat currency.

The project also has its own native token, NEXO, that grants a number of benefits when locked within its own platform. Those include discounts on interest on loans, as well as the opportunity to receive interest payments on funds deposited, making it a very useful token to have. Not to mention that token holders can also profit from dividends from the project’s own profits if they hold NEXO.

Nexo is also the first project to offer instant crypto-backed loans, which is meant to solve inefficiencies in the lending market. Of course, like all other lending projects, it relies on smart contracts, but also on oracles within Ethereum’s blockchain to manage loans.

As soon as the collateral is deposited into a Nexo-controlled wallet, the oracles establish the loan and allocate the funds to the lender instantly. With that out of the way, let’s take a quick look at how Nexo’s price has been behaving so far, and especially over the last few days.

Nexo price history

The first thing to note is that Nexo was launched in April 2018, just as the bear market seemingly stopped and the bulls were trying to return. This allowed its price to start climbing immediately, and go from its starting price of $0.21 on May 2nd, 2018, to $0.40 on May 8th of the same year.

The bullish break ended right after that, and the bears returned at full force, making the NEXO price crash to $0.04 as its lowest point. Throughout the entire 2019 and most of 2020, NEXO did not move too far away from its bottom, and it only started seeing real growth around November 2020, when it first reached $0.1. Only two months later, the coin hit the highest point in its history until then at $0.7, slightly correcting in the final days of the year.

Nexo price 2021

In 2021, Nexo exploded like never before, starting its surge in the last days of January. Sitting at $0.6 at that time, the coin suddenly skyrocketed and it kept going up for months, finally reaching its all-time high at $4 in mid-May 2021, just before the price crash that cut the entire crypto industry’s value in half.

NEXO went from $4 on May 12th to $1.1 on May 23rd, and while it did see an immediate recovery after that, it returned to its bottom at $1.5 after that. This support has been quite strong since then, and it is the only thing that kept NEXO from crashing down below $1.

In fact, between late June of this year and right now, NEXO has been fluctuating between $1.5 and $2, never strong enough to breach $2, but often threatening to break the support at $1.5 that has been holding it from continuing its major drop.

Fortunately, the support held, and interestingly enough, the resistance was the one to break first in Nexo’s newest rally.

The new rally started only two and a half days ago, on late October 18th, pushing the coin from $1.7 where it found itself at the time to $2, and after briefly struggling with the resistance, it finally broke. The coin rushed to $2.1, which is where it encountered a new barrier which it also managed to break. Right now it is at $2.14, still sticking very close to $2.1, but seemingly treating this level as a new support now.

Why is NEXO price surging?

A few days ago, New York Attorney General’s Office published that it sent cease and desist letters to two crypto lending platforms, although without revealing the names of the companies. It was soon discovered that the targeted firms were Celsius and Nexo, which Nexo soon confirmed.

However, the crypto firm called the arrival of cease and desist an obvious mix-up, as it was ordered to stop offering its services in a state in which it’s services are not being offered, and have never been offered until this time. As soon as the company pointed out that cease and desist order does not make much sense in its own case, its coin started surging, potentially due to increased attention caused by the very cease and desist order that could have potentially crippled it.

As for how long NEXO can go before it loses its momentum — it has yet to be seen. There are no certainties regarding that, so anyone who is buying Nexo for its current surge in popularity might want to carefully analyze it first and try to determine for themselves whether or not it is the right time to buy, and what might be next for the coin.

Ali is a freelance writer covering the cryptocurrency markets and the blockchain industry. He has 8 years of experience writing about cryptocurrencies, technology, and trading. His work can be found in various high-profile investment sites including CCN, Capital.com, Bitcoinist, and NewsBTC.

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