Some investors turning their backs on original coin to smart contracts

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Some investors turning their backs on original coin to smart contracts

It's starting to look a little old-fashioned for investors living on the digital edge.

Some are turning their backs on the original coin designed to be an alternative to regular cash, in favor of its descendants, which are native tokens of platforms that host smart contracts and apps.

MarketVector's Smart Contract Leaders Index, which tracks major tokens of this kind - including ether, dot and solana - is up 36% in 2023, beating evenBitcoin's 33% rise. Solana's token is up 76% this year.

Bundeep Rangar, CEO of Fineqia, said he expects to see the biggest returns from smart contract tokens on platforms that support DeFi apps.

He said that those are ones that you will find capital appreciation, similar to what a growth stock will be.

Some investors in the $1 trillion world of digital assets appear to agree, according to CoinShares data showing investment products tracking ether and solana have seen small inflows even as bitcoin products suffered four consecutive weeks of outflows.

Almost seven of the top 20 biggest assets are smart contract token, including ether and dot, solana and cardano.

BofA analysts pointed out the smart contract token and the applications they power as similar to growth stocks in the equities world, typically technology shares.

Analysts at Bank of America wrote in a Feb. 24 research note that we expect 2023 to be the year of token price divergence.

The cord may be fraying as smart-contract tokens take over its super-growth mantle, as it has been traded in tandem with tech stocks for a long time.

The 30 day correlation with the Nasdaq was negative on Feb. 23 for the first time since December, where a measure of 1 indicates that the two assets are moving in lockstep.

Some analysts say that the strength in smart-contract token this year points to a solid performance by the most established DeFi protocols despite the market ructions of 2022. They cautioned against the global macro outlook and central bank policy that could affect the growth of cryptocurrencies projects and their associated token.

James Butterfill, head of research at CoinShares, said it was too early to call a major divergence in the field of Cryptocurrencies. Its share of the total market value is up slightly to 40%, from 38% at the beginning of the year.

Butterfill said such departures could be a potential sign of the growing of the criptoverse.

We should be increasingly adopting the view that the market will become more sophisticated and more mature as it evolves, and we will start to see price divergence.