Following a turbulent January where the majority of the market experienced heavy declines, we’ve handpicked some of the top cryptocurrencies of interest for this month
January turned out to be a devastating month for the cryptocurrency market, with its total capitalization plummeting to $2.7 trillion and losses of more than $350 billion.
At the time of this writing, extreme fear has gripped the industry, with sentiment being at its lowest point in months. Bitcoin’s price closed a fourth consecutive monthly candle in red – something that hasn’t happened since the bear market in 2018.
But as the popular investment saying goes, it’s best to buy when there’s blood on the streets. Now, there’s no telling that the market will bounce and that the worst is behind us, but if you were looking for a discount, well, it’s here.
That said, let’s have a look at the top cryptocurrencies to put on your watchlist in February.
Hyperliquid: Price Actually Goes… Up?
Hyperliquid is a decentralized exchange that allows users to trade perpetual futures (and spot) of both cryptocurrencies and traditional assets. The latter happens through a protocol upgrade, largely known as HIP-3 (HIP meaning Hyperliquid Improvement Proposal), which went live a couple of months ago, but it seems to be picking up a lot of speed.
The exchange’s native cryptocurrency, HYPE, is up a whopping 25% in a month, while almost everything else is trading in the red. And when I say almost everything else, HYPE is one of the two coins of the top 20 by market cap that are up on the monthly chart.
It’s true that Hyperliquid has been in the spotlight for a while, but the protocol appears to be holding up well during periods of extreme market turmoil. HYPE’s price is fueled in part by the constant buying pressure on behalf of the protocol’s Assistance Fund, which automatically converts 99% of the fees generated by Hyperliquid into HYPE at prices from the open market. For reference, these fees haven’t dropped below $2 million per day on many occasions during the past year, while, at the same time, they go parabolic during times of market volatility.
HYPE is one of the few protocols that are generating hundreds of millions in yearly revenue, and many in the industry view it as a product that has found a perfect market fit.
Bitcoin: Time for a Recovery?
As I mentione din the beginning, BTC’s price charted four consecutive negative monthly candle closes – something that we haven’t seen in roughly eight years. That’s a very long period in the crypto universe. Now, of course, past performance is never an indication of future returns, but it’s something to think about.
Bitcoin’s price is currently trading below $80,000 – more than 40% from its all-time high.
But it’s also true that the most recent drop wasn’t entirely isolated to crypto. The rally in precious metals like gold and silver came to an abrupt halt, with gold plummeting by more than 20% and silver by more than 50% off their values from just a few months ago.
That’s not typical of traditional assets, even less so of gold, which is historically incredibly static in terms of price performance. Many analysts expect gold prices to recover, inevitably pulling silver with them, driven by geopolitical tensions and economic power plays by the US, EU, China, and others. If that happens, then perhaps crypto markets will also see a relief rally, with Bitcoin highly likely to take center stage as the leading asset. This inevitably brings us to…
GOLD-Backed Coins
Cryptocurrencies like PAX Gold (PAXG) and Tether Gold (XAUT) are digital representations of an ounce of gold and backed by its physical equivalent. If the past months have taught us something it’s that it’s a wild market for precious metals.
Analysts are not writing off the rally, and many believe a bounce is coming. After all, not every week do we see a 20% decline in gold’s price. In addition, the international landscape remains as uncertain as ever. The US is about to enact a new Chairman of their Federal Reserve, their relationship with what used to be their biggest partner in the face of the EU is questionable, the war in Ukraine goes on, there’s tension in the Middle East, and Greenland’s fate remains unknown following conversations in Davos.
While all of this should spell trouble for risk-on assets like stocks (and crypto), risk-off assets (like gold) should thrive. Those of you who are not keen on off-ramping can take a look at gold-backed cryptocurrencies as an alternative.
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