Tuesday, January 18

The most popular cryptocurrencies are bitcoin and ether alternatives


FOMO is still alive and well in the world of cryptocurrencies, with lesser-known tokens surpassing again in the wake of recent rallies hosted by industry leaders Bitcoin and Ether.

Cardano has doubled this month, making it the third largest digital asset. Binance Coin has also risen. A token called Avalanche has tripled in August. Meanwhile, prices for digital photos of rocks with laser eyes and cute animal cartoons are getting tremendous, sometimes quadrupling in a matter of days.

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Among analysts and investors, there is little consensus on what is driving parts of the frenzy. Some posit that speculators are moving from the pillars to newer and more exciting branches, as they often do after big races. Others see a world awash in cash and ultra-low rates, ultimately pushing investors toward increasingly wonderful assets. Some tokens are backed by strong narratives, such as technological advancements on the Cardano and Solana networks.

“There is no question that there is a lot of excitement in cryptocurrencies,” said Yoni Assia, founder and CEO of online exchange eToro. “You can definitely see it within the industry figures, whether it’s looking at total volumes or company growth,” he said, adding that “we’ve seen a lot of exuberance in the market.”

Assia calls it a “generational buying moment” and cites a confluence of events, including rock-bottom interest rates around the world, as well as massive fiscal stimulus efforts that issued checks to many during the pandemic.

Some of that money has been earmarked for cryptocurrencies and related assets, such as digital miner stocks. About 15% of Americans who received the first two stimulus checks invested some or all of the money, and about half of this group invested specifically in cryptocurrencies, according to a survey of more than 1,000 American adults conducted by The Harris Poll for Yahoo! Finance. .

At the same time, inflation has materialized as economies reopen, capitalizing on warnings from some crypto faithful of pending hyperinflation. Put all of that together and “it’s leading a lot of people to seek various types of investments,” Assia said.

A recent eToro survey found that roughly a quarter of the 6,000 investors consulted their own crypto, a number that rises to nearly 50% for the younger cohort. The company also found that the average investor was set to increase their crypto allocation in the coming months and that interest in alternatives to Bitcoin and Ether, or altcoins, is “significant.”

Meanwhile, crypto trading app downloads are on the rise: Coinbase Global Inc. ranked 11th among financial apps in Apple’s iPhone downloads, according to App Annie, a mobile data and analytics provider. Last August, it averaged 23rd place in its category. Digital exchanges Kraken, Voyager, and Crypto.com have also moved up the ranks.

“With all this money floating around, it should come as no surprise that there are people paying exorbitant amounts of money for digital pet rocks and an infinite number of other digital assets that can be easily created,” said Michael O’Rourke, chief market officer. JonesTrading strategist.

The space is dominated by younger generations, he said, and all they know is a Federal Reserve that has been almost perpetually accommodative. Take that, along with a paralyzed government, and it’s no wonder so many have gravitated toward the crypto space, he said.

Since July, assets under management for digital asset investment products increased more than 57% to approximately $ 55 billion. Average daily aggregate trading volumes increased more than 46% to $ 544 million, the largest month-over-month increase since May, according to data tracker CryptoCompare.

A lot of attention has been paid to altcoins like Cardano, Avalanche, and the mainstay of Dogecoin memes. Meanwhile, an index that tracks some of the largest decentralized financial protocols and applications, the Bloomberg Galaxy DeFi Index, is up about 50% since the beginning of July.

“Overall, there has been quite positive crypto sentiment recently – NFTs have helped lead the resurgence, and the May crash is more 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 that now that the recent Ethereum network upgrade is complete, speculators are turning their attention to rival blockchains and their tokens.

Meanwhile, the US stock markets seem to be hitting records on a daily basis. Meme actions are going crazy too. Jason Urban, Co-Head of Galaxy Digital Trading, said that when the market is in such a risky frame of mind, cryptocurrencies can only benefit.

In the four years ending in 2019, the correlations between Bitcoin and the daily returns of the S&P 500 were generally small, according to Wei Liang of DBS in Singapore. But starting last year, that changed. Amid the pandemic, Bitcoin and US stocks have jointly tumbled and recovered, he said.

“Lately, you see people are worried about inflation, people are worried about the money supply, so historically, people always said they buy stocks as a hedge against inflation,” Urban said. Now, he added, it is also crypto.

© 2021 Bloomberg


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