The January euphoria in the crypto markets turned into concern in February as investors drove down the prices of most major digital assets.
The pullback coincided with a cascade of worrying inflation and employment data, starting with a lukewarm consumer price index (CPI) in the first half of the month and continuing with alarming stability in jobless claims. unemployment insurance and an even more alarming increase in consumer spending. It also came amid a flurry of regulatory action in the United States that has raised concerns that government agencies are going too far or diverting their efforts.
Bitcoin (BTC) was recently trading flat a month ago at around $23,080, though it is well down from its mid-February highs above $25,000, data shows. from CoinDesk. The largest cryptocurrency by market cap rose around 40% in January.
Ether (ETH), the second-largest crypto by market value, also traded sideways during the month to hover at just over $1,600. ETH rose over 30% in January.
“I think the story of the ETH pullbacks and the upcoming Shanghai update has a lot of people concerned that these aren’t performing as well,” said Katie Talati, head of research at Arca, crypto asset management company, at CoinDesk. “But a lot of people accrued income from the fees they earned during that staking period.”
Bitcoin Stacks Network’s native layer-2 protocol STX token took home the biggest winning trophy among 160 assets on the CoinDesk market index, climbing 216% in February. The STX token started the month around 27 cents and climbed as high as 95 cents on February 27 before pulling back slightly.
STX’s price surge coincided with growing interest from market participants in the creation of non-fungible ordinal tokens (NFTs), which are NFTs on bitcoin activated by so-called listings on the Bitcoin mainnet.
Talati d’Arca said the larger idea of improving the scalability of the Bitcoin network has been around since Bitcoin’s Taproot upgrade — multiple signatures and transactions bundled together for better privacy and scalability — in November 2021.
But she added: “More information has become available over the past few weeks from people who are buying and trading it more. A lot of people have said, “Well, if ordinals work really well, that gives people a reason to use the bitcoin network, and so they’ll need to use Stacks.”
Talati noted that there is still no market or infrastructure for Bitcoin NFTs. “People trade these ordinals over the counter (OTC) using spreadsheets for bids and asks.” she says.
Forex payment gateway Alchemy Pay (ACH) was February’s second-biggest gainer, surging nearly 170%. Adventure Gold (AGLD) and TrueFi (TRU) jumped more than 50% during the month, according to CoinDesk Indices. The CoinDesk Market Index (CMI) is up 3.3% for the month.
Tokens affiliated with gaming and the metaverse, which led the January winners’ chart, were among the biggest laggards in February. GMT, the native token of the STEPN ecosystem in the culture and entertainment sector, fell 33% this month, while the native GALA token of Gala Games, which jumped 233% last month, fell 28% in February.
The APT token of the Aptos layer 1 network, which jumped 387% in January, fell almost 30% in February.
Vetle Lunde, principal analyst at crypto research firm Arcane Research, wrote in a weekly note that the tokens’ recent highs and lows, saying that in three of the past four weeks, the winner of the “top 50 plays” from the previous week became the worst performer of the next week.
“Altcoin cycles tend to be short-lived, but this goes beyond the norm and exhibits all the hallmarks of a bored market looking for opportunities, in addition to no new market entries. capital,” he wrote, adding, “Low liquidity facilitates this erratic pattern, and you don’t want to be the one holding the bag when the music ends.