Synthetix (SNX) is down 16% after profit-taking from a 130% rally. Bearish sentiment grows as funding rates turn negative. Traders eye $1.90 support ahead of $1M trading competition. Synthetix (SNX), one of the most prominent names in decentralised finance (DeFi), has taken a sharp turn after an explosive rally that saw its price soar more than 130% earlier this month. The cryptocurrency, which recently hit a 10-month high of $2.27, has plunged 16.3% in the past 24 hours as traders rushed to take profits and the broader crypto market slipped into a correction phase. $1 million Ethereum mainnet trading competition The excitement around Synthetix’s upcoming $1 million Ethereum Mainnet Trading Competition has been undeniable. The event, scheduled for October 20 and featuring 100 participants, including top traders and community members, is part of the project’s push to reignite interest ahead of the launch of its first perpetual decentralised exchange (Perp DEX) on the Ethereum mainnet later this quarter. Prizes will be distributed in USDC, SNX, and NFTs, offering both incentive and visibility for the protocol. However, some traders are now questioning whether the current valuation fully reflects the event’s potential. Pre-deposit figures show roughly $6.2 million in sUSD staked so far — an encouraging number but not yet enough to justify SNX’s sharp re-pricing. After a 175% surge over 30 days, the token may have priced in much of the competition’s anticipated success. Profit-taking after a parabolic surge Notably, today’s SNX price drop comes after the near-vertical rally between October 2 and October 13, driven largely by excitement around the $1 million Ethereum Mainnet Trading Competition. The rally pushed the token’s weekly Relative Strength Index (RSI) to 79.17 — a clear overbought signal. Source: CoinMarketCap As SNX touched resistance around the $2.52 level, which coincides with a critical 38.2% Fibonacci retracement, investors began locking in profits. The result was a swift correction, as whale wallets reduced holdings and trading volume fell 23% to around $732 million. Altcoin rotation adds pressure The broader crypto market has also played a significant role in SNX’s recent dip. Over the past week, total market capitalisation fell 4.1% as Bitcoin dominance climbed to 58.9%, signalling a shift of capital from altcoins back to the market leader. SNX was particularly affected, dropping much more sharply than the average altcoin. This rotation reflects a broader risk-off sentiment that tends to accompany volatile market resets, especially after large liquidations — nearly $19 billion in derivatives positions were flushed during the weekend crash. Funding rates for Synthetix (SNX) perpetuals have also turned negative on major exchanges, a sign that traders are paying to hold short positions. This aligns with data from Coinglass showing the token’s long/short ratio has remained flat below one since late September, underscoring persistent bearish bets despite recent price gains. Synthetix price forecast Synthetix’s recent drop reflects more of a natural correction than a breakdown in fundamentals. After a euphoric rally, markets often recalibrate before the next major move. With its Perp DEX launch and the $1 million trading competition just days away, Synthetix (SNX) now sits at a crossroads — balancing short-term caution with long-term promise. If the trading competition succeeds in drawing strong engagement and the new DEX delivers on its technical edge, Synthetix could once again find itself leading the next phase of growth in DeFi, causing Synthetix (SNX) price to rise. For now, though, traders should closely watch to see whether the token can stabilise above $1.90 before attempting another breakout. Failure to hold the $1.90 support level could lead to further decline towards the next support level at $1.56, which aligns with the 50% Fibonacci retracement, or even dip back into the “fair value gap” between $1.31 and $1.63.