Medha Singh and Lisa Pauline Mattackal

(Reuters) – As Bitcoin moves towards mainstream maturity by 2022, crypto investors daringly look for new explosive sources of action. “Altcoins,” which power online worlds and games, are among them.

However, do not be fooled by the look of these unformed foothills.

The market for cryptocurrencies has seen a significant rise in the last two weeks. It was largely falling since 2021.

In the midst of the excitement around the metaverse, rallies have been stronger for smaller and more recent coins that are linked to virtual platforms.

The tokens used to access Decentraland’s gaming platform, and 3D virtual world Decentraland have also seen a 35% and 57% increase in their value over the period Jan. 24-26. According to CoinMarketCap, the token representing Gala’s gaming platform has increased 125%.

“When people think of crypto they tend to think of bitcoin,” said Ed Hindi, chief investment officer of Swiss-based cryptocurrency hedge fund Tyr Capital. This ignores the fact, however that crypto is a multi-risk asset class.

For scale purposes, however, Axie’s combined market capital of Gala, Mana, and Gala is approximately $12.7 billion. This figure represents a small fraction of bitcoin’s $800 billion plus market, which controls 40%.

Some investors are looking to altcoins to diversify their holdings as 13-year-old bitcoin https://www.reuters.com/markets/europe/cryptoverse-teenage-bitcoin-throws-an-interest-rate-tantrum-2022-01-25 and No. Ether 2 players are increasingly moving with the traditional stock market and becoming more aware of macroeconomic developments.

According to CoinShares data, this may be a sign that there has been a drive for inflows into multi-asset fund management of a mix of coins.

However, the novelty of many coins and lack of track records raises investors’ risk levels in this volatile crypto space. Gala’s success and that of other virtual currency players like Axie are directly tied to Gala’s.

BOTTOM OF BLOCKCHAIN

Market watchers have indicated that altcoins with the Layer 1 protocol are also being benefited by the rising interest in the metaverse. It is the basis on which buyers and sellers write smart contracts in code.

These include the ether of blockchain and its challengers, as well as, which has risen 27%-28% and 23% in the last two weeks.

Hany Rashwan (chief executive officer, cofounder and chief operating officer at 21Shares, New York/Zurich-based crypto fund manager) said that “a lot of people are sensing it as a purchasing opportunity” and is buying overwhelmingly high-quality alts and blue chips over bitcoin.

Smart contracts are a great buying opportunity if you can develop a thesis.

WHERE’S THE BITCOIN GROUP?

Bitcoin is back – even though bitcoin is currently rallying, despite its nearly half-dead value in the period between January 24 and December 31, its upward trajectory seems far less certain, as indicated by data from hedging.

Trovio Capital Management head of trading research Will Hamilton cites the futures funding rate, which has remained negative from early December. This suggests that people are buying short. He also points out options data that shows options to buy bitcoin instead of buying. The put/call ratio has reached 58% since the May-July 202021 saleoff.

“Traders continue to wager on more downside during the consolidation,” he stated.