Which altcoins will take center stage in 2022?

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The ero­sion of Bitcoin’s dom­i­nance as the most valu­able cryp­tocur­ren­cy in terms of mar­ket cap­i­tal­iza­tion last year could point the way to fur­ther gains for alter­na­tive dig­i­tal assets, indus­try experts say.

Bitcoin’s total share of the cap­i­tal invest­ed in cryp­tocur­ren­cies eased to 39% at the end of 2021, down from 70% at the start of the year.

The invest­ment flows were biased towards alt­coins — or all cryp­tocur­ren­cies apart from Bit­coin — a sign they are gain­ing ground on the orig­i­nal cryp­tocur­ren­cy as investors chan­nel funds into tokens with util­i­ty and com­mu­ni­ty appeal, rather than just a spec­u­la­tive asset.

While there is no immi­nent threat that Bit­coin will be top­pled, with recent data even show­ing its dom­i­nance has rebound­ed to 43% on a mar­ket cap of US$740 bil­lion, the gen­er­al idea is that alt­coins have a bright future as the cryp­to indus­try matures. Some ana­lysts even spec­u­late that Ethereum, which cur­rent­ly has an 18.1% share of the total cryp­tocur­ren­cy mar­ket cap­i­tal­iza­tion, may even­tu­al­ly dis­place Bit­coin for the top spot, a pos­si­ble future event referred to as “The Flippening.”

“There is an evo­lu­tion we’re see­ing in the mar­ket, a move away from spec­u­la­tion, and a move toward util­i­ty. This demon­strates just how much the cryp­to mar­ket is matur­ing,” said Steve Ehrlich, CEO and co-founder of cryp­to-asset bro­ker Voy­ager Digital.

Apart from the pos­i­tive growth out­look for Ethereum, ana­lysts also high­light­ed Ter­ra, Avalanche, Cos­mos, Fan­tom, and CHZ as among the Bit­coin alter­na­tives that may out­per­form thanks to their unique qual­i­ties and growth prospects.

“Invest­ing in pret­ty much any good #Alt­coin right now will yield a huge prof­it in the future,” cryp­to investor That Mar­ti­ni Guy tweet­ed on March 7.

The smart-con­tract blockchain Ter­ra, and its LUNA coin, have gar­nered atten­tion part­ly because it now ranks only behind Ethereum in terms of total val­ue locked (TVL) in decen­tral­ized finance. Ter­ra cur­rent­ly accounts for US$25.3 bil­lion of such con­tracts, com­pared to US$108.17 bil­lion for Ethereum. 

Terra’s sta­ble­coin ecosys­tem has been her­ald­ed as next-gen­er­a­tion dig­i­tal mon­ey because it is easy to spend, with low fees, instant set­tle­ment and util­i­ty for cross-bor­der transactions.

“The growth of decen­tral­ized sta­ble­coin UST, which pro­pels LUNA’s growth, has been mon­u­men­tal, over the last six months, the UST mar­ket cap has increased 441%,” said Mar­cus Sotiri­ou, an ana­lyst at Glob­al­Block. “For every UST being mint­ed, the equiv­a­lent amount of Luna is burnt.  This reduc­tion in sup­ply with a con­stant demand results in an increase in price.”

Avalanche is a pro­gram­ma­ble smart con­tract plat­form for decen­tral­ized appli­ca­tions that has won praise from indus­try experts who see it as offer­ing a num­ber of advantages.

“Fast trans­ac­tions with low costs and ease of bridg­ing to and from Ethereum, has quick­ly made it a mar­ket leader,” Ehrlich said. “It’s clear the mar­ket is look­ing for cheap­er alter­na­tives to Ethereum, with an empha­sis on ease of use and reliability.”

Avalanche can con­firm trans­ac­tions in less than two sec­onds and should ben­e­fit from a planned decen­tral­ized iden­ti­ty solu­tion, accord­ing to GlobalBlock’s Sotiri­ou. It has a well-earned rep­u­ta­tion as the “fastest smart con­tracts plat­form,” Sotiri­ou said. 

Cos­mos has been praised by some ana­lysts for its growth poten­tial in sup­port­ing an ecosys­tem of blockchains capa­ble of inter­op­er­at­ing and scal­ing with each oth­er. Cos­mos and its token ATOM rank as the 21st most valu­able cryp­tocur­ren­cy by mar­ket cap­i­tal­iza­tion at US$7.8 bil­lion, accord­ing to Coinbase.

“The inter blockchain com­mu­ni­ca­tion pro­to­col allows inde­pen­dent blockchains to be able to com­mu­ni­cate with each oth­er, which I think is essen­tial for cryp­to as a whole to suc­ceed,” Sotiri­ou said.

Sotiri­ou also high­light­ed Fan­tom, a smart con­tract token that rose sharply last year. The token rose from 1.7 US cents to close the year at US$2.25. It was recent­ly trad­ing at US$1.26, down by over 63% from its all-time high in October.

“In my opin­ion, the Lay­er 1 blockchain will con­tin­ue to take mar­ket share from Ethereum, due to its sig­nif­i­cant­ly low­er gas fees and greater scal­a­bil­i­ty,” Sotiri­ou said.

Still, the out­look for Fan­tom has tak­en a knock after the news that devel­op­ers Anton Nell and Andre Cron­je plan to exit from the project. The token fell by more than 21% dur­ing the ses­sion fol­low­ing the announce­ment on March 6.

Fan tokens are grow­ing in pop­u­lar­i­ty amid wider uptake by sport­ing fran­chis­es. Among the stand­outs is CZH, a token linked to the mar­ket­ing plat­form Socios.com, which has part­nered with more than 120 major sports orga­ni­za­tions includ­ing the U.S. Nation­al Foot­ball League, Nation­al Bas­ket­ball Asso­ci­a­tion and Euro­pean Foot­ball Association.

“This is a sports fan engage­ment plat­form that allows sports and enter­tain­ment enti­ties to mon­e­tize their audi­ences,” Sotiri­ou said.
“The most pro­lif­ic use case so far has been foot­ball fan tokens. Teams like FC Barcelona, Juven­tus, Paris Saint-Ger­main already have fan tokens, and I expect the plat­form to gain remark­able hype lead­ing up to the foot­ball World Cup lat­er on this year.”

Oth­er ana­lysts cau­tioned that uncer­tain­ty weigh­ing on glob­al mar­kets may tamp down the glob­al appetite for riski­er assets.

In such an envi­ron­ment, Bit­coin may act as a draw for investors seek­ing a safe haven. Tony Sycamore, City Index’s senior mar­ket ana­lyst for APAC, fore­casts that Bit­coin will main­tain its dom­i­nance at between 40% to 45% in terms of mar­ket cap­i­tal­iza­tion of cryp­tocur­ren­cies this year.



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