This article explores recent movements in the cryptocurrency market to identify the sectors and tokens with the best performance.
This new article examines recent movements in the cryptocurrency market to try and understand which sectors and tokens are delivering the best performance in this early part of the year in order to better prepare for Bitcoin’s next halving (the halving of miners’ rewards per validated block of BTC), which is anticipated to occur around the beginning of 2024.
Figure 1 displays 25 of the most popular tokens in the crypto world. Except for stablecoins, they are the most heavily capitalized coins and come from a variety of industries, including DeFi (AAVE), Gaming (AXS), Exchanges (BNB), Layer 2 (MATIC), and of course the two most important cryptocurrencies, BTC and ETH.
In these calculations, the first date is obviously January 1, 2023, while the last date is May 23, 2023. The majority of the equities under evaluation have performed well in these initial few months.
Only APE and LUNC, with -8.73% and -40.54% returns, are present. We all know about the LUNA project, which was destroyed in days, leaving many investors on the brink of disaster and causing a domino effect across the sector. APE, a project at the center of the NFT industry, presumably covered the cost of the considerable increase in 2022 due to its Binance listing.
Solana (SOL), which has a performance of 98.6%, is now the top-performing cryptocurrency in 2023, followed by Fantom (FTM), which has a return of 83.6%. With results of 65.4% and 60.19%, respectively, Curve (CRV) and Decentraland (MANA) are also doing well.
Additionally, Bitcoin (BTC) did quite well, increasing from $16607 to $27334 in 2023, a gain of 64.6%. A little farther down the list, Ethereum (ETH) is up a respectable 54.29%.
Coins from various industries
Several alternative coins from various industries show out as you go down the list, including Cardano (ADA) with 48.37%, SandBox (SAND) with 32.56%, and others.
Axie Infinity (AXS), which has a moderate growth (given the volatility of the crypto industry) of 9.31% in 2023, Dogecoin (DOGE), which is hanging near parity (3.9% to be exact), and of course the aforementioned APE and LUNC are among the poorest performers.
These findings might imply that a new crypto rally is imminent, but for the majority of them, the path back to the previous highs remains a far-off mirage. In fact, Figure 1’s ATH (all-time high) column shows that there is still a significant gap between the present price and the all-time high.
Let’s just say that despite the current surge of 64.6% in the price of bitcoin, the difference from the all-time high is still very noticeable (-60.37%). The situation is considerably worse for cryptocurrencies, whose tokens are more than 90% below all-time highs.
All of this indicates that a far larger rebound than we have seen thus far is required to recoup these drawdowns and reach historical highs, as seen in Figure 2. In reality, a 100% positive performance would be necessary to recover from a 50% deficit. Similar to this, a 150% performance is needed to recover a 60% drawdown, and so on down to 90%, when a 900% performance is needed to get back to previous highs.
Given the significant drawdowns and the impending halving of bitcoin, this time in history may be a good opportunity for those who believe in these projects to invest in cryptocurrencies. However, caution is advised because it is far from certain that cryptocurrencies that have suffered drawdowns of over 90% will ultimately regain the lost ground.
In the end
According to the data we have so far, the market for cryptocurrencies is extremely volatile, so it follows that one should treat it with great caution and avoid investing too much money. At the very least, one should only invest the amount of money that they are willing to lose, which is typically between 90 and 95 percent of their initial investment.
Overall, 2023 is still making progress toward recovering from the severe drawdowns of 2022. Therefore, keep an eye out for changes between now and early 2024 when bitcoin will be halved, which historically has been the beginning of all rallies observed in bitcoin (and other cryptocurrencies as well) since its birth.