Dubai: In the cryptocurrency world, lesser-known tokens have outperformed in the wake of recent rallies staged by Bitcoin and Ether.
Cardano has doubled this month, becoming the third-largest digital asset. Binance Coin is also up. A token named Avalanche tripled in August.
Meanwhile, prices for digital photos of rocks with laser eyes and cartoon depictions of cute animals are going gangbusters, sometimes quadrupling in a matter of days.
Among analysts and investors, there’s little consensus as to what’s driving parts of the frenzy. Some posit that speculators are moving from the mainstays to newer, more exciting offshoots, as they often do after big runs.
Too much of cash
Others see a world awash in cash and ultra-low rates, which ultimately pushes investors toward ever-wonkier assets. A few tokens are backed by strong narratives, such as technological advances at the Cardano and Solana networks.
“There’s no doubt that there’s a lot of excitement in crypto,” said Yoni Assia, founder and CEO of online exchange eToro. “You can definitely see it within the numbers in the industry, whether it’s looking at total volumes or looking at growth of companies.”
Assia calls it a “generational buying moment” and cites a confluence of events, including rock-bottom interest rates as well as massive fiscal stimulus efforts that delivered cheques to many people during the pandemic.
Some of that money has gone toward cryptocurrencies and related assets, such as stocks of digital miners. About 15 per cent of Americans who received the first two stimulus payments invested part or all of the money, and about half of this group invested specifically in cryptocurrencies, according to a survey of more than 1,000 US.adults conducted by The Harris Poll for Yahoo Finance.
At the same time, inflation has materialized as economies reopen, playing into the warnings from some crypto faithful of pending hyperinflation. Put all that together and it’s “leading a lot of people to look for various types of investments,” Assia said.
Coinbase Global Inc. ranked 11th among finance apps in Apple’s iPhone downloads, according to App Annie, a mobile data and analytics provider. It averaged 23rd within its category last August.
Digital exchanges Kraken, Voyager and Crypto.com have also advanced in the ranks.
A lot of the attention’s been placed on altcoins such as Cardano, Avalanche and the meme mainstay Dogecoin. Meantime, an index tracking some of the largest decentralized finance protocols and apps.
“There’s generally been pretty positive crypto sentiment recently: NFTs have helped lead the revival, and the crash from May is further in the rearview mirror,” said Sam Bankman-Fried, CEO of crypto exchange FTX.
And then there are the blockchains looking to compete with Ethereum. Avi Felman, co-portfolio manager at BlockTower Capital, said now that Ethereum’s recent network upgrade is done, speculators are turning their attention toward rival blockchains and their tokens.