INSUBCONTINENT EXCLUSIVE:
Among analysts and investors, there's little consensus as to what's driving the frenzyFOMO remains alive and well in the cryptocurrency
world, with lesser-known tokens outperforming again in the wake of recent rallies staged by industry leaders Bitcoin and Ether
Cardano has doubled this month, becoming the third-largest digital asset
A token named Avalanche has tripled in August
Meanwhile, prices for digital photos of rocks with laser eyes and cartoon depictions of cute animals are going gangbusters, sometimes
quadrupling in a matter of days.Among analysts and investors, there's little consensus as to what's driving the frenzy
Some posit that speculators are moving from the mainstays to newer, more exciting offshoots, as they often do after big runs
Others see a world awash in cash and ultra-low rates, which ultimately pushes investors toward ever-wonkier assets."There's no doubt that
there's a lot of excitement in crypto," said Yoni Assia, founder and chief executive of online exchange eToro
"You can definitely see it within the numbers in the industry, whether it's looking at total volumes or looking at growth of companies,"
he said, adding that "we've seen a lot of exuberance in the market."Mr Assia calls it a "generational buying moment" and cites a confluence
of events, including rock-bottom interest rates worldwide, as well as massive fiscal stimulus efforts that delivered checks to many people
during the pandemic.Some of that money has gone toward cryptocurrencies and related assets, such as stocks of digital miners
About 15 per cent of Americans who received the first two stimulus checks invested part or all of the money, and about half of this group
invested specifically in cryptocurrencies, according to a survey of more than 1,000 United States adults conducted by The Harris Poll for
Yahoo Finance.At the same time, inflation has materialized as economies reopen, playing into the warnings from some crypto faithful of
Put all that together and it's "leading a lot of people to look for various types of investments," Mr Assia said.A recent survey by eToro
found that roughly a quarter of the 6,000 investors queried own crypto, a number that increases to nearly 50 per cent for the younger cohort
The company also found that the average investor was set to increase their crypto allocation in the coming months and that interest in
alternatives to Bitcoin and Ether, or altcoins, is "significant."Meanwhile, downloads for crypto trading apps are rising -- Coinbase Global
ranked 11th among finance apps in Apple's iPhone downloads, according to App Annie, a mobile data and analytics provider
It averaged 23rd within its category last August
Digital exchanges Kraken, Voyager and Crypto.com have also advanced in the ranks."With all of this money floating around, we should not be
surprised that there are people paying exorbitant amounts of money for digital pet rocks and an endless amount of other digital assets that
can be easily created," said Michael O'Rourke, chief market strategist at JonesTrading.The space is dominated by younger generations, he
said, and all they know is a Federal Reserve that's been almost-perpetually accomodative
Take that, alongside a gridlocked government, and it's no surprise many have gravitated toward the crypto space, he said.Since July,
assets under management for digital-asset investment products rose more than 57 per cent to roughly $55 billion
Average daily aggregate trading volumes increased more than 46 per cent to $544 million, the biggest month-over-month rise since May,
according to data-tracker CryptoCompare.A lot of the attention's been placed on altcoins such as Cardano, Avalanche and the meme mainstay
Meantime, an index tracking some of the largest decentralized finance protocols and apps -- the Bloomberg Galaxy DeFi Index -- is up about
45 per cent since the start of July."There's generally been pretty positive crypto sentiment recently: NFTs have helped lead the revival,
and the crash from May is further in the rearview mirror," said Sam Bankman-Fried, chief executive officer of crypto exchange FTX.And then
there are the blockchains looking to compete with Ethereum
Avi Felman, co-portfolio manager at BlockTower Capital, said now that Ethereum's recent network upgradeis done, speculators are turning
their attention toward rival blockchains and their tokens.Meanwhile, the United States equity markets seem to post records daily
Meme stocks are going bonkers too
Jason Urban, co-head of Galaxy Digital Trading, said when the markets in a such a risk-on mood, crypto can only benefit.In the four years
ending in 2019, correlations between Bitcoin and daily returns for the S-P 500 were generally small, according to Wei Liang at DBS in
But that changed starting last year
Amid the pandemic, Bitcoin and United States stocks have fallen and rebounded jointly, he said."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," Mr Urban said
Now, he added, it's crypto as well.(Except for the headline, this story has not been edited by TheIndianSubcontinent staff and is
published from a syndicated feed.)
