Even as Bitcoin and Ether continue their bullish rally in the crypto space, new altcoins Cardano, Binance Coin and Avalanche have emerged as strong contenders in the race, reports Bloomberg.
Cryptocurrencies have witnessed a market rally this month, pushing its market cap beyond the $2-trillion mark in mid-August. It had earlier reached its all-time high in May, falling a little shy of $2.5 trillion. But the prices dropped in June and July, weighed down by worries over the environmental impact of creating coins and processing transactions.
In August, digital coin Cardano surpassed Binance to become the third most valuable crypto after Bitcoin and Ether with an $80 billion market cap. Binance is also reaping gains, while a third altcoin Avalanche has tripled its market cap this month.
Also read:
Analysts are divided in their opinion on what’s driving the markets. Some believe speculators are looking at newer offshoots as often happens in big bull runs, while a few others say that investors are awash with cash leading to an interest in alternative assets. However, some attribute the rally to technological advances in Cardano and Solana networks.
Cardano is witnessing the bullish trend on the back of the upgrade of Alonzo Purple, which is believed to be a game-changer. It will help the network get smart contracts capability such as decentralised finance, non-fungible token, and automated lending.
"There's no doubt that there’s a lot of excitement in crypto," Yoni Assia, founder and chief executive of online exchange eToro, told Bloomberg. "You can definitely see it within the numbers in the industry, whether it’s looking at total volumes or looking at the growth of companies,” he said, adding that “we’ve seen a lot of exuberance in the market."
According to Assia, low-interest rates and massive fiscal stimulus from the government during the pandemic are the reasons behind the rally in the crypto market.
A survey conducted by The Harris Poll for Yahoo Finance of more than 1,000 US adults shows that about 15 percent of Americans who were given the first two stimulus cheques invested all or part of their money. Of this group, about half invested in cryptocurrencies.
Another reason behind the focus on alternative assets is the rise in inflation, said Assia. A recent survey by eToro found that in the coming months, average investors are set to raise their crypto allocation with many looking at alternatives to Bitcoin and Ether.
According to data-tracker CryptoCompare, assets under management for digital-asset investment products have increased more than 57 percent to about $55 billion since July. Average daily aggregate trading volumes witnessed more than 46 percent rise at $544 million in August.
The Bloomberg Galaxy DeFi Index -- an index to track decentralized finance protocols and apps -- is also up nearly 50 percent since July.
"Lately, you see people are concerned about inflation, people are concerned about money supply -- because of that, historically, people always said buy stocks as a hedge against inflation," said Jason Urban, co-head of Galaxy Digital Trading, adding now people are buying crypto as well.
(Edited by : Jomy Jos Pullokaran)
First Published: Aug 30, 2021 3:58 PM IST
