Synthetix vs Bitcoin: Which Crypto Should You Buy In 2022

Last Updated March 24th 2022
17 Min Read

Synthetix and Bitcoin are about as different as two blockchain projects can be. But as we head further into 2022, many potential cryptocurrency investors are wondering which of these tokens may provide better returns - the established market leader that has attracted huge amounts of institutional investment, or the more advanced platform that is seeking to expand the possibilities of DeFi?

If you ask most people to name a cryptocurrency, then even in 2022 they will almost invariably name Bitcoin as it remains the most famous token without a doubt. However, the last few years have seen a huge amount of change within the cryptocurrency industry and the growth of DeFi and the NFT trend have shone a 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 the most popular - features of the blockchain world. Whereas Bitcoin offered a digital alternative to fiat currency, the industry has evolved to provide cryptocurrency holders with a whole host of decentralised financial services, mimicking those found in the world of legacy finance. 

One of the latest applications of DeFi, that has drawn considerable attention over 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 - 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 we need to consider when weighing up these two tokens. In the following article, we’ll be looking at the technical particulars of each coin, as well as hearing what leading analysts are predicting for their future price movement.

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Synthetix vs Bitcoin - The Fundamentals

Synthetix vs Bitcoin image

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 started life in 2018 and was originally called Havven - a platform that was set up to mint stablecoins. However, it wasn’t long before the project reassessed things and a few months after launching it turned its attention to synthetics -  the term for cryptocurrency-based derivatives. 

To understand Synthetix, it’s important to know what derivatives are. These are a popular type of financial instrument that derives value from the price of an underlying value. For example, when you buy and sell a CFD or options, two popular types of derivative, you are not taking hold of the underlying asset, but speculating on its potential price movement. 

Naturally, the concept of a derivative lends itself well to the world of cryptocurrency - as tokens can be created to represent that value of just about 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. In order to do this, it has to have a data feed on the value of that asset. For 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 token types are pegged 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 on which they can be bought and sold. The advantage of Synths being ERC-20 tokens is that they can potentially be used with numerous other leading DeFi projects. Underpinning the whole 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. Most

importantly, it is SNX that is staked to mint Synths - or sTokens.  Once 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 equities. 

When creating Synths, a collateralisation ratio of 600% is applied. So, if you wanted to create $100 worth of sUSD, you’d need to stake SNX equivalent to six times that value. It is through this collateralisation principle that Synthetix keeps its Synths stable. 

In addition to its key role in the Synthetix protocol, SNX is also used in governing the project. Holders of the token can vote on important developments and upgrades, effectively steering the direction of the project. 

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Bitcoin

Background

Bitcoin’s history is pretty well documented at this stage. When the token was originally launched back in 2009, it was truly revolutionary and offered to completely disrupt the traditional financial world. In the original whitepaper, 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 launched, the potential of cryptocurrency became an almost constant feature in discussions about the future of business and finance - and Bitcoin found itself quickly becoming synonymous with cryptocurrency. In fact, the term was and still is used interchangeably. 

However, whilst Bitcoin introduced the world to blockchain technology and its significant potential, ultimately it has 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 big firms looking to protect themselves against economic downturn in the traditional equities markets. 

Transactions and Speed

Compared to the smart networks on the market, Bitcoin’s transaction rates are pretty sluggish. Of course, this is to be expected - the market moves quickly, after all. But producing around 5 transactions per second and with a ten-minute block creation time, Bitcoin is never going to be able to support high volume transactions. 

Bitcoin relies on the proof-of-work consensus mechanism, wherein ‘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 sluggish. 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 really is no comparison. However, we should remind readers that from a speed perspective, Bitcoin was surpassed many years ago, yet it continues to dominate the market. 

Supply and Demand

As we’ve mentioned above, miners on the Bitcoin network are rewarded for verifying blocks. This is how new BTC are released into the system. However, the block reward halves at certain intervals - roughly 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 capped at 21 million. In theory, these factors mean that Bitcoin is increasing in scarcity as time goes by, which in theory could drive its value up. 

Furthermore, Bitcoin has become popular with institutional investors who acquire large sums to hold long term. Once again, this effectively removes the BTC from circulation and contributes to the increasing scarcity of the token. 

Read Also: Ways to Make (or Lose) Money With Bitcoin (BTC)

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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 equivalents have. But Bitcoin is still yet to be seriously challenged as the most valuable cryptocurrency on the market.

Of course, what investors are interested in is growth. To try and measure up Synthetix vs Bitcoin from an investment perspective, we have to consider a few things regarding each tokens price. 

Bitcoin Vs Synthetix: Price History

Before we can look at future predictions, it is first worth taking a retrospect 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 down to under $0.15 throughout the latter half of 2018.

The opening months of 2019 remained fairly uneventful for Synthetix, with the occasional uptick sending the price up to around $0.30. Summer of that year saw SNX start to gather pace and in November prices soared to $1.52 - marking a growth of around 1420% in 10 months. 

After the price surge at the end of 2019, SNX held its price well for a few weeks and traded above $1 until prices slumped after April 2020. For several weeks, the token struggled to get back to $0.70. Prices remained subdued until July, wherein SNX suddenly soared to $2. The upwards trend continued at an impressive rate and by September the token was trading at an average of $7.43.

Once again, the token struggled to hold onto its gains and by November it had all but halved in value. However, the token saw another significant upsurge in the final days of December, sending it from $4.39 to $7.22. 

SNX continued to prosper into 2021 and in February it reached its all-time high of $28.35, marking a impressive increase of almost 300% for the year up to that point. The following weeks saw substantial volatility and at one point SNX had slumped to $13.27. However, it had recovered to $26.16 before the crypto market crashed 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 went into a period of 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. Put simply, where BTC goes, other tokens tend to follow. However, in its early days, Bitcoin alone carved out a reputation for having substantial price swings. For example, the token started trading at fractions of a cent, yet just a few years later - in 2013 0 it hit 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, wherein BTC reached a high of $19,783 before a market-wide downturn struck and sent its price crashing to $3,430 by the end of that same year. 

However, despite the crash, by this stage, Bitcoin had already built a reputation as an investment asset that could offer substantial returns. It wasn’t long before buyers returned and the price of BTC started to rise. By January of 2021, the token had reached an unprecedented $40,000. A few weeks later, BTC hit $64,804. 

The summer of 2021 saw some slowdown for the cryptocurrency market, but in November BTC had recovered and soared to a new high of $69,044. This surge was then followed by a market downturn that persisted throughout January and February 2022.

Bitcoin vs Synthetix: Future Predictions

The price data we’ve seen can tell us a great deal about how each token moves in relation to the wider market, as well as how it may respond to certain market forces. However, ultimately investors are more concerned with what is likely to happen in future. With this in mind, we checked out several price predictions for Bitcoin vs Synthetix.

As always, we should stress that these forecasts are effectively guesswork based on analysis of previous prices - they are not guaranteed.

Synthetix

Synthetix has demonstrated that it is capable of significant price increases, but it has also show a propensity for volatility. Looking ahead, 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 be up by around 46% in October, with a trading price of $6.07. However, by December it will have dropped to $5.65. Similarly, in April 2023 the token could reach as high as $7.29 but just three months later it will sink to $5.97. Nonetheless, by the end of 2025, SNX is predicted to be trading at $9.01. 

Meanwhile, TradingBeasts sees Synthetix struggling across 2022, as the cryptocurrency downturn continues to bite. However, by December 2023 the platform expects SNX to have reached a potential high of $7.05 and an upward trend is expected to continue well into 2024. In 2025, TradingBeasts’ forecast suggests SNX could once again breach the $10 barrier. 

Finally, CoinPriceForecast has made the most optimistic Synthetix price prediction. Its technical analysis suggests the token could increase in value by as much as 56% across 2022. Across 2023, growth is expected to slow somewhat, but in 2024 the token could reach an average trading price of $7.34.

Check Out: Synthetix (SNX) Price Predictions

BTC

If we look at Bitcoin vs Synthetix from a forecast 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 crypto investors - but don’t be fooled. BTC, just like any other digital asset, still comes with a high degree of risk. 

So what are analysts predicting for the original cryptocurrency? Well, DigitalCoinPrice predicts that Bitcoin may take its time in recovering, but will ultimately offer solid returns. It has BTC trading at $56,570 by the end of 2022 - an increase of 36% on today’s price but still well below its higher end trading price. By the end of 2023, the token is expected to have reached a new high of $73,184 and in 2024 we could see BTC go past $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. The token is then predicted to perform well across 2023, with the potential to get very close to the much-anticipated $100k barrier. WalletInvestor’s prediction then believes BTC will hit 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 hold its value across 2022 and by the end of 2023 it could be down as much as 32%. However, recovery will get underway in 2025 and by December that year BTC could reach a new ATH of $75,884.

Of course, these predictions are highly speculative but they do help us to weigh up Bitcoin vs Synthetix from an investment perspective and go some way to indicating current market sentiment for each project. 

Don't Miss: Bitcoin (BTC) Price Prediction

Synthetix vs Bitcoin: What the Experts Say

We have looked at the price data of Synthetix vs Bitcoin and that certainly gives us an idea of what we can expect from each project, but another option we have is to hear from business and finance experts on what they believe are the prospects for Bitcoin and Synthetix. 

For example, Galaxy Digital’s Mike Novogratz has long been a vocal proponent of Bitcoin. Even during January’s market downturn, Novogratz made a $1 million bet with crypto sceptic stockbroker Peter Schiff that BTC would be trading back above $35,000 within the year - and he was right. In fact, Bitcoin had recovered $35k just over a month later. 

Novogratz believes that interest from institutional investors will continue to drive Bitcoin to new heights in the coming years. 

Meanwhile, a study from Carnegie Mellon University CyLab has suggested that cryptocurrency derivative markets are booming, with some days seeing over $100 billion in trades - a volume that rivals the New York Stock Exchange. Looking forward, CyLab’s Nicolas Christin, a co-author of the study and a professor in the Institute for Software Research says that “cryptocurrency derivative markets are beginning to dwarf normal markets, and this affects not just those steeped in the crypto world, but even those outside of it.”

This is certainly good news for Synthetix, which is currently the top platform for crypto derivatives. 

Synthetix vs Bitcoin: Conclusion

Weighing up Synthetix vs Bitcoin is a tough one, as the projects are so different. Synthetix is well placed 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 as a safer bet by comparison.

However, whilst Bitcoin probably does offer more stability at this stage, we’d advise against seeing 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. Its 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 each project will see growth across 2023 and 2024. Whilst these are by no means guaranteed, the expert comments suggest that there is every reason to be optimistic over both tokens. 

Synthetix is undoubtedly the more advanced platform, but Bitcoin is still the market leader by a considerable margin. The bottom line is that both of these 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 set to be an exciting time for the cryptocurrency market. If you are looking to start your investment journey, then there are a few things you’ll need. Firstly, you’ll need a wallet to store your tokens. There are plenty to choose from and our guide to wallets will help you choose the most suitable one for you.

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With an excellent reputation and award-winning platform, eToro offers a secure environment in which you can buy and sell several major cryptocurrencies - including Bitcoin and Synthetix.  

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FAQs

What is Synthetix?

Synthetix is an advanced project that can mint cryptocurrency-based derivatives - known as Synths. Synths can be used to represent the price of an underlying asset - whether it be another cryptocurrency or even commodities like gold and oil. Trading a derivative rather than the asset itself opens up a world of possibilities for cryptocurrency investment - but its important to understand exactly what they are before you enter the market. 

Will Synthetix overtake Bitcoin in 2022?

Comparing Synthetix vs Bitcoin is something of a fools errand, as the projects are so different. Realistically, Bitcoin leads the market by a considerable margin so it would be unreasonable to expect Synthetic to overtake it in the near future. That being said, the cryptocurrency market changes quickly, so who knows what will happen in the coming years?

Where can I buy Bitcoin?

Bitcoin is the world’s most popular cryptocurrency and is listed across pretty much every exchange and digital marketplace. If you want to buy Bitcoin in 2022, then we recommend checking out eToro, as it is a trusted provider of retail brokerage services and offers competitive fees as well as a user-friendly trading platform. 

Which crypto should I buy in 2022?

Cryptocurrency investors have a huge amount of options when it comes to building a portfolio. There are the major names, like Bitcoin and Ethereum, which are widely expected to grow in value over the coming years, as well as the lesser know DeFi projects, like Synthetic and Bancor, both of which have the potential for significant growth in 2022. We recommend checking out our guide to which 10 cryptocurrencies could explode in 2022.

What are cryptocurrency derivatives?

Cryptocurrency derivatives are tokens that represent the price of another asset. In theory, these can be any tradable asset, including equities, commodities and ETFs. The idea is that cryptocurrency derivatives allow traders to speculate on the price movement of an underlying asset, without having to take ownership of the asset itself. 

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