For investors living on the digital fringes, Bitcoin is starting to look a little dated.
Because of the high growth, some are abandoning the original cryptocurrency, which was created as an alternative to conventional cash, in favor of its descendants, which were created as hallmarks of blockchain platforms that host smart contracts and applications.
MarketVector’s Smart Contract Leaders Index, which tracks major tokens of this type, including ether, dot, and sola, is up 36% in 2023, even outpacing bitcoin’s 33% rise. Solana’s mark is up 76% this year.
Bundep Rangar, CEO of crypto-focused asset manager Fineqia, said he expects the biggest cryptocurrency revenues to come from smart contract tokens on platforms that support decentralized finance (DeFi) applications.
“These are those who find capital appreciation similar to a growth fund,” he added.
Some investors in the $1 trillion digital asset world seem to agree, with data from CoinShares showing small inflows even as investment products that track ether and sola have suffered four consecutive weeks of outflows from bitcoin products.
Seven of the 20 largest cryptocurrency assets are smart contract tokens, including ether and dot, solana, and cardo.
BofA analysts also noted that smart contract tokens and the blockchain-based applications they power are similar to growth funds in the stock world, typically technology stocks.
“We expect 2023 to be a volatile year for token prices,” Bank of America analysts wrote in a Feb. 24 research note.
BITCOIN STILL BOSS
Bitcoin has long traded in tandem with tech stocks, but that string may be fraying as smart-contract tokens increasingly take up its mantle of crypto growth.
The cryptocurrency’s 30-day correlation with the Nasdaq turned negative for the first time since early December on February 23, where the 1 measure indicates the two assets are moving in lockstep.
Some cryptocurrency watchers say the relative strength of smart contract tokens this year reflects the better performance of the most established DeFi protocols despite the 2022 market crash. However, they caution that the global macro outlook and central bank policy could weigh on growth. cryptographic projects and associated tokens.
James Butterfill, head of research at CoinShares, cautioned that it’s too early to tell if there’s a big gap in cryptocurrencies. Indeed, the shadow of Bitcoin still looms large in this sector, its share of the total capitalization of the cryptocurrency market slightly increased from 38% at the beginning of the year to 40%.
But on the other hand, Butterfill said such departures could be a possible sign that the cryptocurrency is on the rise.
“We have to take more of a view that as the market develops, it’s going to get more mature and mature, and we’re going to start seeing that price differential.”
(Except for the headline, this story was not edited by NDTV staff and was published on a syndicated channel.)
Featured image of the day
India hopes for the future: Bill Gates after meeting with RBI Governor Shaktikanta Das