Know why investors are considering exchanges native tokens over Bitcoin, Ethereum

Investors saw that the crypto market took into account the geopolitical tensions between Ukraine and Russia in its cumulative capitalization.

After dropping nearly $34,000 following the announcement of the Russian invasion on Feb. 24, Bitcoin’s price has recovered. But it remains below the crucial level of $40,000. Interestingly, research by Bloomberg suggested that investors are now leaning towards exchanging native tokens amid the market’s weakness. And do not rely on the king coin and other popular altcoins. This has basically turned Bitcoin into a defensive asset or one that can provide a steady stream of income.

Jeff Dorman, chief investment officer at digital asset fund manager Arca, told Bloomberg:

“For some reason, people still think Bitcoin is a defensive asset, even though it has absolutely no features of a defensive asset. The things that should be defensive are exchange tokens because there is real income, cash flows, and depreciation.

Gold and bonds are often classified as defensive assets. What Dorman explains regarding exchange native tokens is their risk-return profile. Notably, Bitfinex’ $1 utility token Leo was later sold for $5.50 by Arca, the media outlet quoted. FTX’s FTT token is another similar example, with Arca indicating the importance of fundamental analysis. Clara Medalie, director of research at crypto trading data firm Kaiko, told Bloomberg:

“The FTX token is highly correlated with positive reporting. FTX has had a better year than most other exchanges that have their own exchange tokens, so it’s not surprising that FTT is positive.”

Binance Coin BNB also recently clocked a 118.3% increase in active addresses. So paint a strong recovery image. Meanwhile, Nansen also notices a spike in the number of unique addresses with LEO and FTT. As to which, Dorman explained,

Essentially, who benefits from the volatility? The exchanges. stock exchange [tokens] need to outperform as their volume and revenue increase.”

Modeled on Bitfinex, the controversy revolves around the 2016 hack. Recently, an American couple was arrested for allegedly trying to launder Bitcoin worth billions stolen in the Bitfinex hack. Previously, the value of the exchange token grew in the optimism of the recovered amount. Dorman added,

“You have this kicker which is basically a call option on whether or not” [Bitfinex] will ever get the money back.”

Some time ago, the decision of crypto exchanges FTX US and Bitstamp USA to step into traditional finance to beat competitors like Robinhood also made headlines. What is also noteworthy is that research shows that the stock market and crypto space have become more correlated than ever after the pandemic. Therefore, the responsibility now rests with native tokens and the increasing number of unique users. Dorman further explained,

“Smart investors invest in exchange tokens. Especially anyone who does some real fundamental analysis and cares about growing real business.”

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