No ‘value’
“These tokens are likely not to have any fundamental value,” said Jacob Joseph, a research analyst at CryptoCompare.
Bitcoin has kicked off 2023 with a bang.Credit:Getty
Crypto watchers Messari said the coins may have popped higher because upward momentum led some market players to rapidly shutter bearish bets.
“Traders tend to short low-value tokens to hedge exposure to the broader crypto market, leading others to try to perform a short squeeze and causing these quick pumps,” said Kunal Goel, an analyst at Messari.
Beyond Sam Coins, the buzz around viral AI bot ChatGPT has also spilled over to crypto. Fetch.ai, the token of a project trying to marry digital ledgers and AI, has jumped to about 28 US cents this month from less than 10 cents.
Metaverse jumps in
The metaverse is getting in on the act too: the coin of the Decentraland virtual world has added 140 per cent in January. In gaming, the Axie Infinity token has more than doubled even though the game’s popularity crashed last year.
A laundry list of risks remains on the horizon to challenge the sanguine investor sentiment evident in the menagerie of crypto’s smaller tokens.
One threat is the possibility of sticky inflation that forces interest rates higher for longer than currently expected, sapping risk appetite. Another danger is the ongoing contagion from FTX’s wipeout, most recently the bankruptcy of crypto lender Genesis Global Holdco LLC.
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Digital-asset markets appear to be pausing to figure out what’s next. A gauge of the largest 100 coins was little changed Monday in London, while the largest token Bitcoin was steady at about $US22,785.
Bitcoin’s 37 per cent climb in January so far is the best for the first month of the year since 2013, helping to take the overall value of crypto tokens past $US1 trillion, according to CoinGecko.
Bloomberg
