Altcoins surge as Evergrande crisis cools off, with avalanche, cosmos and polkadot leading the charge
cosmos, dotand sol rose sharply, recovering from this week's meltdown.
- Risk appetite picked up after Evergrande made interest payments on some of its bonds, allaying some investor concerns.
Cryptois not tightly correlated with other risk assets in the long term, Marcus Sotiriou from GlobalBlock said.
The smaller cryptocurrencies rallied sharply on Thursday, enjoying a swell of risk appetite after some of the concerns around the debt crunch at Chinese property company Evergrande that had rattled
While the likes of cardano's ada,
Cosmos, a decentralized, peer-to-peer network that enables data exchanges between blockchains, was the front runner, as its atom token gained 23% over 24 hours to stand at $40.38 at 06:13 a.m. ET, according to coinmarketcap.com. Avalanche's avax token rose 20% in a day to $76.39, while layer-zero protocol polkadot's dot went up 9% to $31.26. So-called "ethereum killer" solana's sol rose 12% to $148.02.
Worries cooled about Evergrande on Thursday after the firm agreed to settle interest payments on a domestic bond the previous day and the Chinese central bank injected extra liquidity in the financial system.
The company owes more than $300 billion to bondholders and banks all over the world and an announcement earlier this week that it might not make a key coupon payment hit risk assets such as stocks and cryptocurrencies hard.
"Crypto is a risk-off asset, so will fall with stocks in the short term, but they are not correlated over the long term," Marcus Sotiriou, sales trader at UK based digital asset broker GlobalBlock.
Altcoins have been on a tear so this year, with sol up almost 10,000%, meme-token dogecoin up 4,000% and avalanche's avax up 2,300%, prompting many to question whether some of these lesser-known tokens linked with smaller networks are in a bubble.
"Many coins with strong fundamentals that are solving real life problems are experiencing rapid network adoption. I think these cryptocurrencies are very undervalued given the power of network effects and size of the market they are going after," Sotiriou said.
"When comparing the same (total value locked) TVL amounts of these networks against ethereum [it] indicates that they are likely undervalued," Eliézer Ndinga, research lead at 21 Shares, a crypto exchange traded products provider, said.
Total Value Locked is the dollar amount invested in decentralized financial applications built on blockchains, Ndinga said. This metric measures the overall health of an application in real-time and is one way to determine the value of one network versus another.
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