Crypto Analytics

Native Crypto Exchange Tokens Hint at Early Signs of Broader Market Recovery

  • Crypto markets rallied on Thursday after days of selling pressure sparked by the collapse of DeFi ecosystem Terra
  • Bitfinex’s native token Unus Sed Leo has performed particularly well thanks to booming trading volume on the exchange

Crypto markets have hit their lowest levels in more than a year as the aftermath of Terra’s implosion weighs heavily on essentially all digital assets.

The total market cap of all cryptocurrencies bottomed at nearly $1.1 trillion during Thursday morning trading. That’s less than half of their market cap at the start of the year, when crypto was valued at $2.2 trillion as a whole.

However, since the bottom, traders have given back about $135 billion in crypto’s total market cap, although it’s still unclear if the rally will last.

The top 10 cryptocurrencies (excluding stablecoins) have rallied more than 14% on average since the market bottom – led by alternative layer 1 token Avalanche and native exchange Binance coin BNB, each up about 25% gained.

Market leaders bitcoin and ether are recovering at a comparatively slower pace, up around 9% since the local bottom.

In fact, some of the most resilient cryptocurrencies of late have been the native tokens traded on exchanges — most notably Bitfinex’s Unus Sed Leo (LEO).

Similar to Binance coin’s BNB, Bitfinex traders can save on fees by using the token (LEO double as a mechanism to recover funds lost in a significant 2010).

But LEO is down less than 2% since Terra’s algorithmic stablecoin UST lost its dollar peg for the first time. Major cryptocurrencies Solana, Polkadot, and XRP are all down around 25%.

And over the past day, Bitfinex competitor FTX’s native cryptocurrency, FTT, fell less than 4%, while Ether and Cardano plunged 13%.

Daniel Matuszewski, co-founder of crypto investment firm CMS Holdings, said that Blockworks exchange tokens have benefited from booming trading volumes inspired by volatility, largely due to built-in combustion mechanisms.

These mechanisms typically serve as a method of rewarding token holders. Exchanges buy back tokens and burn them – removing them permanently – reducing the circulating supply while boosting purchasing power to boost prices.

“It was a very, very big 24 hours for the exchanges, so there was a ton of firing and buying,” Matuszewski said. “Exchanges are doing an outrageous amount of business and making tons of money right now, and that’s going into their tokens.”

According to data from the crypto index provider, overall exchange volume has increased by 14% over the past day nomicswith Bitfinex up a whopping 34%.

Matuszewski said the worst of the Terra debacle could soon be in the rearview mirror.

“Obviously, when Terra died, it hurt a lot of people, and I think as a result, they had to de-risk elsewhere,” he said. Matuszewski added, “I’m sure people had to make margin calls and there were a lot of forced sales as a result of de-pegging. I think that part of the market cycle is pretty much over.”

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The Post Native Crypto Exchange Tokens indication of early signs of a broader market recovery is not financial advice.

Source: Crypto News Austria

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